The earliest offshore money appeared in Europe, so it is also called the European currency. We call financial markets such as London and Singapore, which operate offshore fund lending and trading, offshore markets or offshore centers. Accordingly, traditional currency deposits without offshore are called onshore currencies, such as US dollar deposits in a bank in new york and British pound deposits in a bank in London. New york's dollar lending market and London's pound lending market are called onshore financial markets. Offshore money's business activities are outside the currency issuing country, so it is not bound by the laws, regulations and supervision of the currency issuing country, and the country where the offshore market is located is often not bound by the local operation of other countries' currencies. Therefore, offshore money is a "free currency". At present, RMB is not a fully convertible currency, and it cannot legally function as a world currency. At present, China's financial system does not provide RMB clearing services to overseas banks, so the offshore RMB market has not yet formed. However, domestic financial institutions can absorb foreign currency deposits and issue foreign currency loans. Shanghai and Shenzhen have also established stock markets denominated in US dollars and Hong Kong dollars. Domestic banks that can engage in foreign exchange business also provide customers with foreign exchange services that do not involve RMB, that is, personal firm foreign exchange transactions, commonly known as "foreign exchange treasure" business. Therefore, it can be said that China has initially established offshore markets for other currencies. It should be noted that domestic cash circulating abroad is not offshore money, and offshore money only refers to overseas local currency bank deposits. Over the years, a large amount of RMB cash has been circulating in countries and regions around China. It is estimated that the cash stock of RMB in Hong Kong alone has exceeded 30 billion yuan. Overseas RMB cash circulation is another research topic. In fact, offshore money is very different from overseas cash. Overseas local currency cash circulation is a currency substitution phenomenon, not an offshore phenomenon. The circulation of RMB cash in Hong Kong shows that RMB cash partially replaces Hong Kong dollars to exercise functions of money in Hong Kong, which is still the direct debt of the People's Bank of China, but it has little impact on domestic monetary policy and macro-economy, and can also bring the People's Bank of China seigniorage income. Assuming that there is an offshore RMB market in Hong Kong, after Hong Kong banks absorb the original RMB deposits, they can form more RMB derivative deposits in the overseas banking system according to the credit derivative mechanism. These RMB original deposits and derivative deposits are the direct liabilities of overseas banks, not the direct liabilities of the People's Bank of China or domestic financial institutions, so offshore money's seigniorage income belongs to overseas banks. Moreover, offshore RMB in Hong Kong mainly functions as a world currency, and its functions of money field is often not in Hong Kong, especially for offshore centers. In addition, offshore currency markets is wholesale, which can have a significant impact on domestic RMB interest rate and exchange rate fluctuations. Nowadays, the local currency is replaced by RMB overseas, but there is no real offshore RMB market. Of course, as long as the domestic financial system provides RMB clearing and cash return services for overseas banks, overseas RMB cash can be easily converted into offshore RMB. It should be pointed out that the establishment of international banking facilities in the United States has given this feature of overseas funds a new meaning. In order to attract a large number of offshore dollars back to the United States, the Federal Reserve approved the establishment of IBFs on 198t to facilitate the local operation of offshore dollars. IBFs has the following characteristics: (1) All American banks and foreign banks that are allowed to absorb deposits can apply to join IBFs, absorb deposits of non-residents in US dollars or foreign currencies, and conduct financial transactions with non-residents; (2) Market transactions enjoy preferential treatment in the offshore market; (3) USD deposited in IBFs account is regarded as overseas USD, which is strictly separated from domestic USD account. IBFs pioneered the establishment of an offshore financial market in local currency in currency issuing countries to carry out offshore financial transactions in local currency, thus breaking the characteristic that traditional offshore finance must float outside the currency issuing countries. However, the characteristics of IBFs show that the nature of offshore money as a "free currency" has not changed.