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Cayman Islands Government

Governor's Speech

HE The Governor Mr Stuart Jack, CVO

HE The Governor Mr Stuart Jack, CVO, Speech at the Cayman Business Outlook, 22 January 2009

Welcome to this conference.

And for those of you from overseas: welcome to the Cayman Islands.

I have always been a strong supporter of these Business Outlook conferences because, thanks to Fidelity and other sponsors, they give us here an invaluable opportunity to hear from leading experts and thereby broaden our own outlook, see what is happening to our own islands in a broader context.

Last year's conference looked at risk. One of the speakers, Nouriel Roubini, predicted with great accuracy the crisis we now face. I say with all modesty that I myself spoke about the considerable risks the world economy and Cayman faced.

This year's conference is equally timely in its theme. It comes at a time of perhaps unprecedented global economic turmoil, when those risks have come home to roost. But the conference - and I hope all of you participants - is doing something noteworthy. You are daring to look ahead to recovery.

The challenge for this conference is to try to identify what role the Cayman Islands has, not just in its own recovery, but in the global recovery.

Some people may say that Cayman is too small to influence the machinations and decisions coming from the US, the EU, the G20. But this view is wrong. It ignores two important facts:

Fact number one - this economic crisis has its roots not only in the US but also in the international system and the solutions will also be found in the US and the international system.

This brings me to fact number two. Cayman is a - not unimportant - part of the international system. On every count, it is a major financial centre.The economic challenge for the Cayman Islands in 2009 is to acknowledge both its global dependency and its individual characteristics in terms of the international economic crisis.

We need to be firm that with our distinct characteristics, we can be part of the international solution, not part of the problem.

Where do we start?

By looking outwards. By looking at what is happening across the world.

Cayman started life because an abundant population of turtles attracted European sailors looking for food. In short, because it was useful to the rest of the world. And it has become a tremendous success - with one the highest GDPs in the Western hemisphere - because it has continued to anticipate the demands of the outside world. Because it has used its enormous expertise - in banking, funds, legal services, accounting - to meet the changing needs of international business customers.

Today, more than ever, we need to think about what we can offer the world. And we should start with our near neighbour, the most powerful country on earth, the United States, while not of course ignoring the growth of other economies, particularly in Asia.

This week, most of the world was glued to their television sets watching the inauguration of Barack Obama.

President Obama understands the magnitude of this crisis. He said: "In the course of our history only a handful of generations have been asked to confront challenges as serious as the ones we face right now"

And President Obama understands the effects of crisis. He also said: "Millions of Americans are losing their jobs and their homes; they're worried about how they'll afford college for their kids or pay the stack of bills on their kitchen table".

The two largest sectors of the Caymanian economy, financial services and tourism, are dependent on the US economy. So we too must understand the magnitude and the effects of the downturn in the US.

We need to understand how big this is before we can identify our own role, and find the steps that will position Cayman to play a useful role in the economy of the future, just as it has played a useful role in the economies of the past.

People might ask, how can we do that?

Well, as a local commentator remarked here after the US elections - "Obama represents the possibilities for all people...anything is possible with hard work and dedication".

Here in Cayman, we work hard, we have dedication - we must not let those values slip.

And we also have serious human capital. Cayman is filled with some of the sharpest legal and financial minds on this planet. They helped build the current economic system. And now they must start work to identify and anticipate the new economic system. They must understand the new realities facing the world's major financial institutions and the fears sweeping over ordinary people across the continents.

Because this crisis isn't going to just fade overnight, with a quiet return to the old days, there will be big changes.

People across the world are scared by the prospect of economic uncertainty. It's no exception in Cayman. We here have not so far felt the effects too dramatically. I fear we will do so more as this year progresses. We must be careful not to be complacent.

In fact we are already sharing some of the negative effects of the downturn. The Government here is having to make hard choices about public spending. It has had to freeze schools and other new projects; and impose cuts on recurrent expenditure. And unlike larger economies, such as the UK, here in Cayman we do not have a tax base to justify greater public borrowing, we will need to keep in line with strict borrowing levels.

Gordon Brown's New Year message said that "when the history books come to be written - 2008 will be remembered for the scale of the great economic and financial crisis". But he also added that 2009 can be the year when "the dawn of a new progressive era breaks across the world".

I hope that the men and women here today can consider how the Cayman Islands can be part of this new progressive era.

What regulatory regimes will this era need? For calls for tougher regulation are not going to go away; and Cayman needs to continue to position itself as up among the most compliant and ethical financial centres.

How green will the new era be? For Cayman cannot afford to ignore the growing demands from tourists and our own people for better environmental standards. Or fail to plan for climate change.

What will the international economic system look like? For Cayman needs to stay ahead of the game.

The leadership of the country - politicians, public servants and businessmen - need to work closely together to chart a way through the current crisis. That means being flexible and quick-moving - to deal with problems and take opportunities as they arise. And there will be opportunities.

It means thinking about the longer term, not just short term political or commercial gain.

What will this country's political leadership say this afternoon? I for one very much look forward to their debate.

I have ended these remarks with questions. I hope that this country and the people here today will find some solutions. Solutions that will work in Cayman. And solutions that will also work for the benefit of the global economy.

This is not an easy task, but it is the most important one facing everyone in this room, and in these Islands.

I wish you all the best for this conference.