What are the characteristics of offshore financial market compared with traditional financial market? What kind is it?

According to the different nature, international financial markets can be divided into traditional financial markets and offshore financial markets.

1. The traditional international financial market refers to the financial market that engages in international credit and international securities business in the currency of the country where the market is located and is under the jurisdiction of the government of the country where the market is located. This type of international financial market is generally formed gradually in history, and has experienced the development stages of regional financial market → national financial market → international financial market, such as London, new york, Paris, Frankfurt and Tokyo.

2. [Offshore financial market] refers to the market where non-residents engage in certain currency transactions outside the issuing country through bank intermediaries. Some people also call it the European money market. It actually includes three aspects. Firstly, it is the lending business of overseas currencies, secondly, the issuance of various bonds expressed in overseas currencies, and thirdly, the exchange market between various overseas currencies, namely the foreign exchange market.

Types According to the nature, there are roughly three types of offshore financial centers:

London type belongs to the "naturally formed" market. The offshore market in London began in the late 1950s. It is engaged in both banking and securities business. Non-residents do not need to pay the statutory reserve for their deposits, but they are allowed to operate various foreign exchange and financial businesses freely. In the past, due to foreign exchange control and other restrictions, this market business was completely separated from domestic business. However, since the abolition of foreign exchange control in June 1979 and 10, the management of foreign exchange financial business has been treated equally with domestic financial business, and the meaning of "offshore" itself has changed. In fact, the offshore market in London has become an "internal and external integration" financial market, with both domestic and offshore business. Since 1972 abolished foreign exchange control, Hong Kong has gradually evolved into a major London-style offshore market in the Asia-Pacific region.

The biggest feature of new york model is "artificial creation" and "internal and external separation", and there is no securities transaction. 198 1 1 In February, 2008, after the Federal Reserve agreed to establish an international banking facility (also known as an international banking facility), the offshore financial business in New York State developed rapidly. Its main trading object is non-residents. Financing can only absorb deposits from foreign residents, foreign banks and companies, but it is not limited to the establishment of international banking facilities by foreign banks. Any American deposit institution, "Aichi Law" company and branches of foreign banks in the United States can apply for establishment. Deposits are not restricted by the reserve ratio and deposit ratio in the domestic banking regulations of the United States. Loans must be used outside the United States. "Loans" can be denominated in any currency, including US dollars. Since the US dollar is the most important international currency, and the main transaction currency in the offshore market is also the euro, new york's offshore market uses its own currency as the main transaction currency. The offshore market in Tokyo opened by 1986 also belongs to this type.

The offshore financial center of the Bahamas with bookkeeping but no substantive business, also called "tax evasion" offshore market, is actually a "tax evasion port". Because the financial business in some countries or regions can avoid bank profit tax and business tax, and the cost and expenses of opening branches in these places are much lower than those in London, offshore financial markets have been opened in these places. Nassau, Cayman Islands and Bahrain all belong to this category.

The development of offshore financial business and the rapid expansion of offshore financial centers have promoted the development of international banks and the growth of international credit and international 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.

Characteristics of offshore financial market

First of all, the market is basically not bound by the financial policies, laws and regulations and foreign exchange control measures of local government departments.

Secondly, the market is dominated by foreign enterprises and is not open to domestic residents.

Third, foreign currency trading in the market does not involve the operation and borrowing of local currency.

Fourth, the market has a relatively independent interest rate system, which is not limited by the interest rate level of the host country, but the interest rates of the same currency between offshore markets tend to converge.

Fifth, there are many kinds of currencies used in the market, and there are many kinds of transactions and services that can be provided to the world.