International financial centres have been widely criticised recently, but without them economic recovery would come under threat

Far from being the weakest link in the financial services value chain, small international financial centres (IFCs) such as the Cayman Islands, the British Virgin Islands (BVI) and the Channel Islands remain critical to the revival of the global economy.

We have heard a lot about the perils of IFCs in recent years. By the measure of some governments and non-governmental organisations, IFCs are to blame for everything from declining tax revenues to terrorism. Thankfully, the truth is far more mundane. 

The many financial institutions, multinational corporations, investment funds and other market participants that invest in these economies and drive growth know that IFCs continue to play a leading role in the global economic recovery. They recognise that IFCs enable wider access to credit markets, provide a platform for the financial innovation that is essential for growth, and offer a stable, tax-neutral platform for the investment that creates wealth, jobs and broader prosperity. 

In the US, new Cayman collateralised loan obligation issuance has helped to free available capital for originators – allowing them to continue to lend. In Europe Cayman funds are facilitating renewed investment in shipping assets, keeping the sector on its feet after it was left battered by the retreat of many of its traditional investors. Their emergence as viable alternative credit providers has also been a welcome sight for cash-strapped small and medium-sized UK enterprises, which have been desperate for funding in a market where many of the traditional lenders have been criticised for their unwillingness to make credit available. 

Further afield Cayman has featured in Asia's first leveraged buyout to be financed directly by a high-yield bond – a testament to the role of IFCs as a platform for the financial innovation that is so essential to economic growth. 

But the IFCs' role isn't just about plugging a credit gap. Jersey, Cayman and BVI entities continue to enable the flow of capital, providing exit routes for holders of private assets across Europe and Asia through listings on leading exchanges. 

IFCs are also supporting economic growth in developing countries by enabling access to loan financing for domestic corporations, which would otherwise have difficulty accessing it. The credit support provided by entities domiciled in creditor-friendly IFCs like the BVI is key to getting international banks comfortable with lending into many developing economies. 

Cayman private equity funds are also investing directly in enterprises operating across Africa and the BRIC economies, and this investment is being used to expand businesses and create jobs.

IFCs are not here through some nefarious scheme to undermine the tax bases of other countries. They are a natural consequence of the globalisation of markets. IFCs were essential in facilitating the move away from a bricks-and-mortar economy, and are again demonstrating their importance as key players in the global economic recovery.

Despite this, various international initiatives leave IFCs squarely in the crosshairs. Fortunately, market participants understand their function and value. They appreciate that each participant in the wider financial markets must play its natural role for the global economic recovery to truly gather pace. Without IFCs, this recovery would surely be at risk. It is a risk that none of us can afford to take. 

David Collins and Alexandra Corner are partners at Walkers.