Bermuda - Economy

Economy

Since switching from the Bermudian pound in 1970, Bermuda's currency has been the Bermudian dollar, which is pegged to the US dollar similar to Hong Kong. US notes and coins are used interchangeably with Bermudian notes and coins within the islands for most practical purposes; however, banks levy an exchange rate fee for the purchase of US dollars with Bermudian dollars. Bermudian notes carry the image of HM Queen Elizabeth II. The Bermuda Monetary Authority is the issuing authority for all banknotes and coins, as well as being responsible for the regulation of financial institutions. There is a permanent exhibition of Bermuda notes and coins at the Royal Naval Dockyard Museum.

According to the Bermuda Government's Economic Statistics Division, Bermuda's GDP was $5.85 billion in 2007, or $91,477 per-capita, giving Bermuda the highest GDP per capita in the world.

The affordability of housing has become a prominent issue during Bermuda's business peak in 2005 but has softened with the decline of Bermuda's real estate prices. The CIA World Factbook lists the average cost of a house in June 2003 as $976,000, while real estate agencies have claimed that this figure had risen to between $1.6 million and $1.845 million by 2007, though such high figures have been disputed.

Bermuda is an offshore financial centre, which results from its low legal regulation and direct taxation on personal or corporate income. The local tax system depends upon import duties, payroll taxes and consumption taxes. The legal system is derived from that of the United Kingdom, with recourse to English courts of final appeal. However, foreign private individuals cannot easily open bank accounts or subscribe to mobile phone or internet service.

Government employment, off-shore business and tourism are the largest sectors of Bermuda's economy. However, in September 2009, it was reported that a growing number of companies were moving from Bermuda to Ireland as part of a search for "a more stable environment".

Large numbers of leading international insurance companies operate in Bermuda. Those internationally owned and operated businesses that are physically based in Bermuda—of which there are around four hundred—are represented by the Association of Bermuda International Companies (ABIC). In total, over 15,000 exempted or international companies are currently registered with the Registrar of Companies in Bermuda most of which hold no office space or employees.

There are four hundred securities listed on the stock exchange, of which almost three hundred are offshore funds and alternative investment structures attracted by Bermuda's regulatory environment. The Exchange specialises in listing and trading of capital market instruments such as equities, debt issues, funds (including hedge fund structures) and depository receipt programmes.

The BSX is a full member of the World Federation of Exchanges and is located in an OECD member nation. It also has Approved Stock Exchange status under Australia's Foreign Investment Fund (FIF) taxation rules and Designated Investment Exchange status by the UK's Financial Services Authority.

Tourism is Bermuda's second largest industry, with the island attracting over one-half million visitors annually, of whom more than 80% are from the United States. Other significant sources of visitors are from Canada and the United Kingdom. Tourists arrive either by cruise ship or by air at L.F. Wade International Airport, the only airport on the island.