There must be many advantages to offshore banking, considering the size of the offshore banking industry. What exactly are those advantages of offshore banking?

The most important advantage of opening an offshore bank account is that it offers you strong financial privacy, although since 11 September 2001 authorities are working to decrease the secrecy policies of offshore banks.

Offshore banking provides the opportunity of depositing your money in a bank that is embedded in a politically and financially stable jurisdiction. This advantage is particularly interesting for individuals living in economically unstable countries.

Some offshore banks provide higher interest rates than domestic banks. This is mainly thanks to the lack of government intervention. In addition, offshore banks generally pay interest without tax deducted.

The booming offshore financial sector offers the remote locations, where most offshore banks are located, an additional incentive for their economies. Offshore financing and tourism are often the only inputs in the small economies of these locations. According to some optimists, offshore banking can help distribute world capital from the developed to the developing world. The validity of this argument is not recognized by all financial and economical experts.

Offshore banks generally offer financial services that are not provided by domestic banks. These services vary from guaranteed secrecy to the possibility of depositing in different currencies and to unique investment possibilities.

Offshore banks also often have ties with other financial structures such as offshore companies, foundations or trusts and hedgefunds that are not well-known by domestic banks and investors.

Advocates of offshore banking argue that offshore banks are an advantage to the global financial industry because they create tax and banking competition. Critics, however, argue that this competition is ruining the financial situations of developed economies because governmentsare pressured to deregulate their own financial system in order to prevent the outflow of capital.

Sources:

www.wikipedia.org
www.offshorecompany.com

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