Offshore Finance Essay

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Offshore financial market of RMB Thanks to globalization, people can do business all around the world and the business dealing with foreign currencies has gradually emerged. Those business activities are known as offshore finance. Offshore financial centers (OFCs) are where these activities accumulates. According to Ahmed Zoromé, IMF Working Paper/07/87, an OFC is a country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy. Clearly, the appearance of OFCs stems from the development of world trade. Efforts to evade financial regulation and political considerations of regulation are among the most important reasons. The formation of OFCs is not a result of human force but a consequence of international political and economic factors. OFCs often enjoy a series of benefits attracting business. Besides the obvious tax reasons, OFCs often have these advantages such as political stability, business-friendly regulation and laws, and above all discretion. Since Chinese economy grows fast in recent years and the China becomes more open after joining WTO. Trading, travel industry and consuming have made the amount of oversea RMB transaction increase and the oversea RMB flow more frequently. Payment and settlement of offshore RMB have become an undeniable fact. Hence there have been substantial needs for an OFC of RMB to deal with this issue. Hong Kong, as an international finance centre, enjoys many of the advantages that are necessary for an OFC. Meanwhile, preparations and warm-up over the decade have also laid the foundation for it to become an offshore financial center. Advantages of Hong Kong Firstly, Hong Kong is a well-recognized world trading, commercial and financial centre. Hong Kong has one of the highest concentrations of banking institutions in the

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