Offshore finance refers to the financing activities carried out by financial institutions located in a certain country that have little connection with the financial system of that country and are not controlled by the financial laws and regulations of that country.
For example, a trust and investment company is headquartered in the Bahamas, but its business activities are to absorb US dollar funds from European residents or other non-US residents, and then invest these funds in European residents or non-US residents. The company is engaged in offshore financial activities.
Strictly speaking, offshore finance is also financing that is not regulated by the domestic banking law of the authorities, regardless of whether these activities are carried out in China or abroad. For example, the international banking facility (IBF) in the United States and the business activities in the offshore financial market in Tokyo belong to offshore finance.
Extended data:
Generally speaking, in order to form an offshore financial market, a city or region must meet the following conditions:
First, relax financial control and foreign exchange control, allow cross-border capital to flow in and out freely, and reduce interest rates and financial transaction restrictions; Exempt from the requirement of foreign currency deposit reserve.
Second, there is a generous tax policy, providing tax relief and other preferential measures, such as reducing or completely exempting interest withholding tax, income tax, local tax and stamp duty.
The third is to maintain the political and economic stability of the country or region. Policy changes and legal amendments need to be highly transparent and have a background of steady economic growth. It is necessary to have a perfect financial legal system to protect the market secrets of both sides of financial transactions.
Fourth, it has a sound financial infrastructure, experienced and efficient financial institutions, a large number of financial professionals and advanced international communication equipment to provide efficient financial services for non-residents.
Fifth, it has a favorable economic and natural geographical location, an international financial market network connecting the whole world, and multinational corporations and multinational financial institutions are relatively concentrated in local cities or regions.
The development of offshore financial business and the rapid expansion of offshore financial market have promoted the development of international banks and the growth of international credit financing. However, because offshore deposits are not restricted by domestic laws and regulations, it has certain influence on the money supply, bank control and the implementation of monetary policy in the country where the deposits are located.
Baidu Encyclopedia-Offshore Finance