Assess the extent to which offshore financial centres contribute to the instability within the international financial system.

Candidate Number: 139140 Geographies of Finance FHS 2012 Word Count: 4,434

Introduction
Crises have been a constant of market capitalism (Palan 2010). However, despite their apparent esoteric natures, Shaxson (2012: 150) notably stated that every crisis since the 1970s has been very much an offshore story. This view has been firmly implanted in the public consciousness by governments and, especially, supranational organisations such as the OECD, who have implemented unprecedented initiatives to name and shame offshore financial centres (OFCs) that are deemed harmful (Maurer 2008). These initiatives, which were initially implemented in the aftermath of the late-twentieth century East Asian and Latin American financial crises, gained additional momentum in the wake of the 9/11 terrorist attacks (Unger & Ferwerda 2008). Furthermore, anti-offshore sentiments have been reignited amidst claims that OFCs were responsible for causing or at least facilitating the financial crisis of 2007-2009, deemed the worst since the Great Depression (Simkovic 2009). Proponents of this view cite the institutionalised opacity as well as lax regulation and taxation in OFCs as facilitating the unsustainability of financial dealings that continue to threaten the international financial system. Conversely, others purport that the OFCs destabilising system have been conflated to justify economic warfare on these jurisdictions (Christensen 2012). Regardless, a belief in their complete innocence in this episode is perhaps nave considering their importance to the shadow banking industry, which was a prevalent driver of the recent crisis (Davies 2010: 104).

I will begin my assessment by examining the features of OFCs that differentiate them from onshore centres. I will then examine the relationship between offshore and onshore centres and the consequent flows between them, before focusing on three prominent ways in which OFCs destabilise the international financial system. Firstly, I will scrutinise the role of OFCs in facilitating the excessive risk-taking of financial services firms, which will be exemplified through the fiascos of LTCM and Bear Stearns. Secondly, I will consider the influence that OFCs and the shadow banking system have had in forming an illusion of liquidity. And finally, I will address the role of OFCs in promoting illicit flows and the potential of these to engender macroeconomic imbalances. Thus, it will be argued that OFCs both enable and encourage the transfer of capital that potentially can destabilise the banking and macroeconomic systems, as well as potentially posing a wider threat to the overall global economy.

What are Offshore Financial Centres?

A snapshot of the modern day elucidates the underlying importance of OFCs to the international financial system, with the former controlling over $18 trillion of global capital, which equates to 1/3 of global GDP (Shaxson 2012: 8). They are the cornerstone of the process of globalisation, acting as intermediaries for up to 50% of cross boundary bank assets in 2000 (Maurer 2008). Importantly, these centres have now diversified their economies, rendering them fully-fledged financial services centres, exemplified by the Cayman Islands, which is currently the fifth leading banking centre in the world with assets of $1.4 trillion (Beekarry 2010).

Central to the functioning of the offshore world is the unbundling of sovereignty, which involves the commercialising and consequent sale of their legal and/or fiscal sovereignty (Hudson 1998; Hudson 2000). Whilst OFCs tend to retain their legal sovereignty, fiscal sovereignty is often sold in favour of garnering economic benefits, exemplified by both Jersey and the Cayman Islands having effective corporate tax rates of 0%, which help to attract mobile financial capital to them (Hudson 1996; Action Aid 2011). This reality is reflected in Murphys (2009) definition of OFCs as jurisdictions that are part of the secrecy world, and create legislation and regulation with the intent that it be used and have an impact beyond its own geographical domain.

However, much confusion surrounds the distinction between the offshore and onshore world. Whilst Hampton (1996) characterises offshore centres as being separated from major regulating units by geography, the truth is that certain geographically onshore centres are undoubtedly offshore in their nature and function. This is best understood by contrasting both the geographical and the regulatory landscape. The latter comprises of socially constructed spatial organisations of economic activity and political regulation, in which offshore centres are represented by areas of low topography, whereas onshore centres are embodied by the peaks (Hudson 2000). Thus, the offshore is a metaphorical concept that is distinguished from the onshore by being detached from reality or real economy wealth-creating production (House of Lords 2009; The Guardian 2009). A political gaffe by President Obama best displays the widespread ignorance towards this notion. The president notably mocked the Cayman Islands for having either the biggest building or the biggest tax scam in the world, ironically unaware that a building in Delaware had over 180,000 more companies registered to it (Forbes 2009; Murphy 2011). Subsequently, despite places such as Delaware being geographically onshore due to their location within a major regulating unit, they are firmly offshore in terms of their role in the international financial system (House of Commons 2008).

This relationship is further complicated by the fact that onshore jurisdictions and their policies often shape the development of OFCs (Hudson 2000). Firstly, OFCs tend to develop in association with specific major regulating units, due to the sharing of a time zone and/or their existence as a relic of geographies of empire, exemplified by half of the worlds OFCs having a history that is directly dependent upon Britain (Roberts 2009; Christensen 2012). Secondly, OFCs can be

characterised as a symptom of the policies of onshore jurisdictions. Due to the composition of the aforementioned regulatory landscape, regulatory arbitrage tends to occur, which involves mobile capital moving from the high peaks in the regulatory landscape, represented by the onshore world, to lower levels with more permissive regulatory regimes, represented by OFCs (IFC Forum 2010). As a result of this, there is often much financial activity between both groups, which can have beneficial but also detrimental consequences for the international financial system.

Two main ideologies conceptualise the consequences that derive from OFCs, which are involved in disassociating finances from territories and concentrating them in places beyond reach of the domestic government. These are, namely, a liberal outlook and a welfare-state view, with each holding a specific view regarding the role of OFCs in mediating financial instability (Palan et al. 2009; Calhoun & Derluguian 2011: 208). The former embodies the view that OFCs increase global productivity and indirectly regulate the international financial system by outcompeting overly restrictive jurisdictions. Milton Friedman best encapsulates this, by stating competition between governments in the public services they provide and the taxes they impose is as productive as competition among individuals or enterprises (Calhoun & Derluguian 2011: 207). Subsequently, these arguments profess that OFCs are influential in maintaining economic growth, and according to Calhoun & Derluguian (2011), they seem to ignore the potential for adverse consequences. However, the latter claims that OFCs both engage in and foster profligacy that results in a misallocation of resources in a market system (Murphy 2011). This is attributed to the veil of secrecy that forms around offshore centres, which both denies foreign authorities access to information and facilitates the avoidance and evasion of tax and regulation (Shaxson 2012). This faction essentially believes that OFCs undermine democracy by privileging the wealthy, and, more importantly, that they foster financial instability (Palan et al. 2009). Their impact on instability is corroborated by many in the scholarly community, such as Palan (2010) and Shaxson (2012) who believe that OFCs are central to discussions on financial crises. Palan (2010), in particular, identifies the OFCs as having a key role in mediating financial instability, but remains undecided over the extent to which they either exacerbate problems or add a distinct layer of instability to the financial system.

Excessive risk-taking
According to Beekarry (2010), the absence of regulation and adequate supervision of OFCs has the potential to lead to systemic risks spreading financial instability across regions. Strict safeguards, such as Basel II, have attempted to prevent events of this type occurring. However, relatively light regulation in offshore centres allows banks registered there to evade scrutiny over their levels of liquidity and capital adequacy (Norris 2009; Hochberg 2010). The use of the shadow banking sector and new financial entities such as SIVs, CDOs and hedge funds is central to attempts at avoiding these restrictions (Shaxson 2012). Despite being invented predominantly in onshore jurisdictions, this system is mainly domiciled in OFCs and, at its peak in mid-2007, it had $22 trillion in liabilities (Pozsar et al. 2010; Stewart 2012). The administering of the shadow banking system in OFCs mirrors the locations of the deepest troughs in the regulatory and taxation landscape (Roberts 2009). This enables excessive risk-taking and the consequent overleveraging of firms, which leads to the amassing of significant amounts of debt (Palan 2010; Shaxson 2012). Distortions of the tax system also occur, especially through a double dip, which involves financial services firms obtaining tax advantages in both onshore and offshore jurisdictions that increase the amount of liquidity available to them. This can render a previously unappealing investment more economically viable due to the simple fact that it is not taxed (Shaxson 2012). This enables firms to further enhance their ability to over-leverage themselves and, as a result, can deepen their immersion in the financial system, thus potentially rendering them too big to fail (Spremann 2000: 4; Murphy 2009; The Financial Times 2009).

The case of Long Term Credit Management (LTCM) illustrated the dangers that the misconduct of a single firm posed to the whole financial system. This hedge fund was incorporated in the Cayman Islands and comprised of a 'dream team' of financial experts, including Alan Greenspan, the former Chairman of the US Federal Reserve (Fabre 2005). Despite investors not knowing which investments were targeted, LTCM was able to amass a mammoth $1.3 billion in equity, on the basis of its owners reputation and their promise of high returns, which amounted to 43% in 1995 (Fabre 2005). This high-risk strategy of over-leveraging, which was exacerbated by LTCMs tax avoidance, resulted in a excessive debt-equity ratio of 25:1, but also enabled the fund to dramatically increase the return on its investment (Prabhu 2001). However, the Russian devaluation in 1998 triggered the funds eventual downfall, whereby its equity fell from $4.5 billion to $1 billion and its debt concomitantly rose to $200 billion (Shaxson 2012). It was deemed that without the intervention initiated by the Federal Reserve, LTCM's portfolio and derivatives would have collapsed, which would have substantially threatened the global financial system

(Fabre 2005; Prabhu 2001). This emphasises how lax regulations and taxation in OFCs have allowed for rapid, unsustainable growth, which can render firms too big to fail, and thus result in them potentially posing a significant risk to the wider economy.

Whilst, certain scholars conceptualise the streamlined environments of OFCs as a symptom to the overly restrictive conditions in certain onshore jurisdictions, Shaxson (2012) instead alleges that the dearth of democracy is the driver. He further notes that the political capture, or flexibility, of offshore governments causes them to manipulate their laws and policies to suit the requirements of hegemonic firms and individuals to ensure they remain within the jurisdiction, whilst often subordinating the needs of their own residents (Shaxson 2012). Furthermore, this capture is also manifest at the regulatory level, whereby certain OFCs regulatory agencies have been accused of placing commercial interests ahead of societal interests (Shaxson 2012). The example of Dublin and its offshore International Financial Services Centre (ISFC) clearly highlights the extent of this. Firstly, regulators were known to sign off on new investments within the space of a day, and used this rapid response as a means of ensuring that firms registered their derivatives in Dublin (Stewart 2012). However, this was done with little regard for the regulators own wider responsibility to guarantee that the derivatives launched were done so with sufficient oversight. Secondly, and more importantly, regulators in OFCs such as Dublins ISFC play on the confusion of who should regulate whom, with this ambiguity stemming from the reorganisation of the regulatory landscape brought about by OFCs. Murphy (2009) stated that the imprecision of language surrounding [OFCs] contributed to the failure to regulate offshore markets. Bear Stearns was a sizeable financial services firm, with three subsidiaries in Dublins IFSC. The firm had assets of $1.5 trillion but had excessively engaged in risk-taking, resulting in $1 of equity financing $119 of their assets (Stewart 2012). Whilst the European Union regulatory authorities believed that the host jurisdiction was responsible for regulating the firm, the Irish regulator disagreed and justified its absence from the regulatory role by claiming that its remit only pertained to firms that were headquartered in Ireland. Subsequently, they maintained that since Bear Stearns transactions occurred elsewhere, it was not their responsibility (Stewart 2012). This apparent disregard for the regulatory procedure led to Bear Stearns being regulated nowhere, which is often the case when OFCs are involved, and this led to severe over-leveraging, the formation substantial debt and the consequent collapse of Bear Stearns, which was cited as having triggered the 2008 credit crisis (Beekarry 2010; Stewart 2012).

Whilst anecdotal remarks pertaining to offshore regulation claim that it is overly negligent, Dharmapala & Hines (2006) believe that this is actually a flawed premise. According to an IMF

report (2005), the rate of compliance by OFCs with supervisory standards and information exchange was 50%, whereas that of onshore centres was only 47% (House of Commons 2008). Furthermore, all tax havens have an adequate level of governance, which is key in maintaining financial stability (Dharmapala & Hines 2006). What is prevalent is that the crisis originated onshore due to the predatory instincts of mortgage lenders, the high-risk taking and the failure in the regulatory philosophy (Forbes 2009). Subsequently, whilst regulation in OFCs may be different, this does not necessarily merit criticism. Importantly, this difference is a reflex to the customer base in OFCs, with OFCs targeting investors in sophisticated instruments, whereas onshore centres tend to deal more with retail customers (Morriss 2009). Thus a cooperative relationship between firms and regulators is formed offshore, and is deemed more successful in the eyes of OFC proponents than the adversarial relationships that are manifest in onshore jurisdictions (Morriss et al. 2012). Therefore, the label of OFC is not and should not be perceived as being synonymous with a jurisdiction that is neglectful towards excessive risk-taking (Morriss 2009). However, nonetheless it is clear that offshore centres and their influence on the amassing of debt has played a key role in financial instability. Their intrinsic characteristics enable firms to engage in excessive risk-taking and grow rapidly to such an extent that their very existence threatens the stability of the financial system.

Illusion of liquidity
The recent financial crisis was born and prolonged by informational failure, with financial actors being privy to an extremely limited amount of information about the solvency of their counterparts (Hoggarth et al. 2010; Shaxson 2012: 192). A primary reason behind this was the actions of certain firms to construct an illusion of liquidity, which resulted in other financial actors severely underestimating risks within the market (Nesvetailova 2008). Firms with large amounts of debt tended to exploit the apparent characteristics derived from OFCs, namely their complexity, secrecy laws and lax regulations, to artificially construct this illusion. This enabled them to move their substantial debts off their books and away from the gaze of investors (Norris 2009). The shadow banking system was central to this process, with securitisation, in particular, driving the movement of debt off the balance sheet. This relates to the creation and issuance of tradable securities, such as bonds, that are backed by the income generated by a financial asset (The Financial Times 2012).

Despite John Maynard Keynes stating that remoteness between ownership and operation is an evil in the relations among men (Shaxson 2012: 193), OFCs enabled firms, such as Northern Rock, to legally disassociate themselves from the entities that they formed. Northern Rock was able to sell its securitised products through a Special Purpose Vehicle (SPV) known as Granite Master Issuer plc, which was domiciled in Jersey and was registered as a charitable trust. Despite never supporting the specified charity, Granite was instead used to handle the majority of transactions in collateralized debt obligations (CDOs) and short-term borrowing, thus effectively acting as Northern Rocks shadow bank (Wojcik & Boote 2011). According to Palan (2010), the relationship between Northern Rock and Granite rendered the pretence of a true sale, a faade, as the original sale of the securitised vehicles occurred in-house, which limited the extent to which these vehicles were able to be adjudged to be relatively sound or not (House of Commons 2008; Palan 2010). Therefore, the opacity and complexity that was generated within the offshore centre of Jersey, in which the SPV was registered, enabled it to amass 50 billion worth of debt without any external parties realising.

Prior to the crisis, financial actors were unaware of the debt that other actors in the system were amassing due to this illusion of liquidity, and were thus still prepared to take risks. However, as soon as stories emerged of instances of bankruptcy, defaulting and the potential for an economic downturn, many of which intersected with the offshore world, fear proliferated (Allen et al. 2009). This issue of asymmetric knowledge alongside publicised examples of collapse fostered the growing mistrust between financial actors and this had disastrous effects on the financial system. Namely, the increased perceived risk associated with ones counterparts potentially being in an extremely poor financial position and not honouring their debts, led to firms being less prepared to engage in lending to each other, which caused the inter-bank lending rates to grow exorbitantly (Palan 2010). Unsurprisingly, for Northern Rock, this resulted in the requiring of liquidity support. Therefore, the masking of financial difficulties through both the manipulation of ownership and the exploiting of the opacity is hugely problematic for the maintenance of financial stability. This illusion of liquidity can engender significant mistrust within the financial system, which spreads through the market, leading up to insolvencies and a systemic breakdown (Nesvetailova 2008). Therefore, offshore financial centres had a prominent role with regards to the liquidity illusion, both in enabling it to be developed in the first place and facilitating its collapse in mid-2007 (Allen et al. 2009).

Illicit flows
Sachs (2011) stated that wealth, power, and illegality enabled by [OFCs is] now so vast as to threaten the global economys legitimacy (Sachs 2011). This illegality, in the form of both illicit inflows and outflows, is purportedly facilitated by OFCs, which distort economies by causing macroeconomic imbalances (Sikka 2003). As previously mentioned, complexity, lax regulation and favourable secrecy laws form a substantial opacity that enshrouds offshore centres, which is further fostered by the presence of the shadow banking system. These render it incredibly difficult to recognise illicit flows in the first place as well as then forging significant roadblocks for law enforcement agencies in any ensuing criminal investigations. The offshore world is thus criticised for its role in the intermediation of illicit financial flows by creating the perfect environment in which criminality can be institutionalised.

Illicit earnings stem from a number of sources including corruption, the narcotics trade and, importantly, tax evasion. Tax evasion is the most common form of illicit financial activity, and is predominantly undertaken by transfer mispricing, which accounts for 65% of transnational illicit flows (Agarwal & Agarwal 2008; Allen et al. 2009). It involves both the under-invoicing of exports and the over-invoicing of imports, with the resultant untaxed money then usually being placed in offshore accounts (GFI 2009). China suffered outflows of $2.2 trillion between 2000 and 2008 due to this, with the majority passing through the offshore world (GFI 2011). All these forms of illegal earnings have a joint factor in common, namely that the respective capital must be disassociated with its illegality if its owner wishes to expend it. This is predominantly achieved through it being cleaned by the process of money laundering, which involves skilfully moving capital through a series of complex stages in order to construct a pretence of legitimate income (Ferwerda 2010). According to Sikka (2003), laundering accounts for flows of up to $2.6 trillion per annum, equating to 6-8% of global GDP, with the majority of this being facilitated by offshore financial centres (Agarwal & Agarwal 2008).

Offshore centres hoover up these illicit flows and, once cleaned, feed them into major financial centres that are usually in fiscal deficit (Kaffash 2011). The influx of such substantial amounts of foreign capital can destabilise an economy, by engendering an exchange rate appreciation, the formation of speculative bubbles in asset markets and/or overheating the economy by increasing aggregate (BIS 2008; Karahan & Colak 2011).

The run up to Mexicos 1994 peso crisis showed a clear involvement of OFCs in facilitating international illicit financial flows. Exorbitant profits from the Mexican narcotics trade of up to $8 billion per year were transferred to OFCs in Europe and the Caribbean (Fabre 2005). Notably, Citibank was deeply implicated in a Mexican money-laundering scheme that was embedded in the offshore world, with a Swiss Citibank account and a SIV in the Cayman Islands being used to clean over $100 million between 1992 and 1994 (The House of Lords 2009). These illegal activities were shrouded in a mire of complexity and secrecy that derived from the fragmenting of capital over multiple offshore jurisdictions. This drastically hindered investigations by law enforcement, allowing for Mexican money laundering in offshore centres to grow in intensity prior to the crisis (House of Lords 2009).

The repatriation of this cleaned money triggered three main financial problems for the Mexican economy. Firstly, troubled state banks were privatised and bought for $12 billion using the money obtained illegally from narcotics trade, but then these were immediately saddled with debt that totalled $60 billion, which resulted in a dramatic weakening of the banking system (Fabre 2005). Secondly, speculative bubbles were formed as narco-dollars were dumped into the stock and housing markets, pushing their respective prices above what was suitably realistic (Ibid 2005). Finally, and most importantly, the increase in liquidity led to a substantial rise in imports, especially of luxury products, from the US (Korinek 2010). Due to the absence of a concomitant rise in export earnings, owing to the lack of investment in improving the productive capacity, Mexicos current account position deteriorated rapidly (Fabre 2005). In order to cope with this overheating, the currency was devalued, payments were defaulted and the so-called Peso crisis began.

Whilst there has been a predominant focus on the destabilising nature of illicit inflows by scholars, the role of outflows has gained increasing prominence due to the recent Greek debt crisis. According to Kar (2010), Greece has been subjected to illicit outflows of $160 billion between 1999 and 2009, with 60% of this attributed to transfer mispricing, which predominantly ends up being routed to OFCs where they are cleaned. Given the already dire fiscal position of Greece, these outflows, which comprise 30% of their GDP, have exacerbated problematic antecedent conditions in these jurisdictions rather than directly destabilising the economy (Shaxson 2012). Subsequently, OFCs have facilitated the exodus of capital from the Greek economy by enabling firms and individuals to exploit their favourable conditions.

10

Thus, through the concealing of finances and the facilitating of money laundering, OFCs clearly create an enabling environment that helps to encourage crime and associated flows by offering an institutionalised cleaning mechanism, which then exacerbates instability in the financial systems of certain economies. However, the prevalence of the onshore cannot be discounted, as the origins of these illicit flows that subsequently pass through OFCs are most often onshore centres (Palan 2010).

Conclusion
This essay has clearly demonstrated that offshore centres have not been the direct cause of financial instability, but instead they have both encouraged alleged adverse financial dealings and created the enabling environment for these crises, as well as amplifying their intensity and extensity (Shaxson 2012: 89). The offshore world provides an attractive and exploitable environment to other financial actors with secrecy, complexity and opacity permeat*ing+ through their very essence (McCartney 2006). These environments stem from the development of OFCs in response to onshore restrictiveness but also from their propensity to succumb to political and regulatory capture.

Offshore centres are essentially tools that are used to intermediate the transaction of both legitimate and illegitimate capital flows of financial actors, who are predominantly located onshore. Firstly, the growth of the shadow-banking sector has been central to OFCs involvement in the global financial system, as well as to the criticisms it has received. Through OFCs relatively low regulation, their propensity for regulatory capture and the extensity (and intensity) of the shadow banking system within them, financial actors have been able to engage in excessive risk taking, exemplified by the actions of the LTCM hedge fund and Bear Stearns. The amassing of colossal amounts of debt by these firms and their potential defaulting on it has threatened the stability of the international financial system in the past. Secondly, the construction of the illusion of liquidity, especially during the last financial crisis, enabled firms to conceal their debts through the manipulation of ownership, as exemplified by Northern Rock. This led to the release of sudden shockwaves through the financial system upon the fallacious nature of the perceived liquidity glut being revealed, which had widespread impacts primarily due to the role it played in causing the effective freezing of inter-bank lending. Finally, illicit flows have predominantly exacerbated financial crises, exemplified by their involvement in Greece and the Peso Crisis in Mexico. They are inherently problematic for economies as they engender macroeconomic

11

imbalances, which can lead to speculative bubbles and an appreciation of the currency. Importantly, these issues can be mutually reinforcing and further amplify the issues at hand.

However, despite being consistently being linked to financial instability, it is disproportionate to place the majority of culpability onto the shoulders of offshore jurisdictions. Onshore financial goliaths exploited the same characteristics of OFCs to conduct their business as criminals who were involved in moving illicit flows, which highlights the immoralities in the actions of the former, but also shows how actors that are responsible for their own actions tend to be located in onshore jurisdictions (Shaxson 2012). Furthermore, onshore jurisdictions have shown that they can have similar, if not more damaging, effects to the global economy as highlighted by the recent financial crisis, which undoubtedly originated in the US and was caused by onshore regulatory failures and oversight. Therefore, it seems unfair that supranational organisations have targeted OFCs in their fight against international financial crises, and thus a degree of reflexivity is perhaps more warranted.

12

Bibliography
1. ACTION AID (2011) Addicted to tax havens: The secret life of the FTSE 100. [online] Available at: http://www.actionaid.org.uk/doc_lib/addicted_to_tax_havens.pdf [Accessed 07/03/2012] 2. AGARWAL, J. & AGARWAL, A. (2008) Money Laundering: The Real Estate Bubble. Finance India, Vol. 22 (1) 3. ALLEN, F. ET AL. (2009) Financial Crises: Theory and Evidence, Annual Review of Financial Economics, Vol. 1 (1), pp. 97-116 4. BANK FOR INTERNATIONAL SETTLEMENTS (2008) The financial stability implications of increased capital flows for emerging market economies. Basel: BIS 5. BEEKARRY, N. (2010) Hedge Funds and Offshore Financial Centers: New Challenges for the Regulation of Systemic Risks. Working Paper Series. George Washington University: Washington D.C. 6. CALHOUN, C. & DERLUGUIAN, D. (2011) The deepening crisis: governance challenges after neoliberalism. NYU Press 7. CHRISTENSEN. J. (2012) The hidden trillions: Secrecy, corruption, and the offshore interface. Crime, Law and Social Change, 57: 32534 8. FINANCIAL STABILITY FORUM (2000) Report of the Working Group on Offshore Centres. FSF 9. GLOBAL FINANCIAL INTEGRITY (2009) Illicit Money: Can It Be Stopped? GFI. 10. GLOBAL FINANCIAL INTEGRITY (2011) Illicit Financial Flows from Developing Countries: 20002009 11. GLOBAL FINANCIAL INTEGRITY (2012) Mexico: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy. GFI 12. HAMPTON, M. (1996) Creating spaces: The Political Economy of Island Offshore Finance Centres: The case of Jersey. Geographische Zeitschrift, 84 (2) 103-113 13. HAMPTON, M. & CHRISTENSEN, J. (2002) Oshore Pariahs? Small Island Economies, Tax Havens, and the Re-conguration of Global Finance. World Development, Vol. 30, No. 9, pp. 1657-1673 14. HOCHBERG, M. (2010) How regulatory arbitrate contributed to the financial crisis of 20072009; And how we can prevent regulatory avoidance in the financial services sector going forward. Thesis: University of Toronto. 15. HOGGARTH, G. et al. (2010) Understanding international bank capital flows during the recent financial crisis. London: Bank of England, Financial Stability Paper No. 8.

13

16. HUDSON, A. (1996) Globalization, regulation and geography: the development of the Bahamas and the Cayman Islands offshore financial centres. Thesis (D.Phil.) University of Cambridge 17. HUDSON, A. (1998) Reshaping the regulatory landscape: Border skirmishes around the Bahamas and Cayman offshore financial centres. Review of International Political Economy Vol. 5(3), pp. 534-564 18. HUDSON, A. (2000) Offshoreness, globalization and sovereignty: a postmodern geo-political economy? Transactions of the Institute of British Geographers, Vol. 25 (3), pp. 269-283 19. IFC FORUM (2010) British Parliament debates role of offshore financial centres. Cayman Islands: IFC 20. KAFFASH, J. (2011) MP calls for less regulation on tax havens 21. KAR, D. (2010) The Alpha, But Whither The Omega, Of The Greek Crisis? The Financial Task Force (BLOG) 22. KORINEK, A. (2010) Hot money and Serial Financial Crises. Washington D.C.: IMF 23. LOOMER, G. & MAFFINI, G. (2009) Tax havens and the financial crisis. University of Oxford, Centre For Business Taxation 24. MAURER, B. (2008) Re-regulating Offshore Finance? Geography Compass, Vol. 2 (1), pp. 155175 25. MORRISS, A. (2009) Changing The Rules Of The Game: Offshore Financial Centers, Regulatory Competition, & Financial Crises. Illinois Law and Economics Research Papers Series Research Paper No. LE09-031 26. MORRISS, A. et al. (2012) Regulatory Effectiveness in Onshore & Offshore Financial Centers. [Property and Environment Research Center]. Available from http://works.bepress.com/cgi/viewcontent.cgi?article=1000&context=andrew_morriss [Accessed 05/03/12] 27. MURPHY, R. (2009) Defining the Secrecy World: Rethinking the language of offshore. Realworld Economics Review 28. MURPHY, R. (2011) Tax Havens, Secrecy Jurisdictions And The Breakdown Of Corporation Tax. Real-World Economics Review 29. NESVETAILOVA, A. (2008) The End Of A Great Illusion: Credit Crunch And Liquidity Meltdown. Danish Institute for International Studies: Copenhagen 30. PALAN, R. (2010) Tax Havens, the Crisis of 2007 and Financial Regulations. The European Financial Review. http://www.europeanfinancialreview.com/?p=1680 31. PALAN, R. et al. (2009) Tax havens: how globalization really works. Cornell University Press

14

32. POZSAR et al. (2010) Shadow Banking. Federal Reserve Bank of New York, New York: Federal Reserve Bank of New York (Staff Report No. 458.) 33. PRABHU, S. (2001) Long-Term Capital Management: The Dangers Of Leverage. Thesis (Bsc). Duke University. Faculty of Economics 34. ROBERTS, S. (2009) Offshore Finance. International Encyclopedia of Human Geography, Pg. 139-145 35. SACHS, J. (2011) The Global Economys Corporate Crime Wave. Project Syndicate 36. SHAXSON, N. (2012) Treasure Islands: Tax havens and the men who stole the world. Bodley Head 37. SIKKA, P. (2003) The role of offshore financial centres in globalisation. Accounting Forum, Vol. 27 (4), pp. 365399 38. STEWART, J. (2012) Shadow Regulation and the Shadow Banking System. Tax Justice Focus, Vol. 4 (2) 39. TASK FORCE ON FINANCIAL INTEGRITY AND ECONOMIC DEVELOPMENT (2009) Economic transparency: curtailing the shadow financial system 40. THE ECONOMIST (2007) Places in the sun [online] Available at: http://www.economist.com/node/8695139 [Accessed 02/03/2012] 41. THE ECONOMIST (2009) The G20 and tax: Haven hypocrisy [online] Available at: http://www.economist.com/node/13382279 [Accessed 02/03/2012] 42. THE ECONOMIST (2011) Avoiding tax: Havens above [online] Available at: http://rss.economist.com/blogs/schumpeter/2011/10/avoiding-tax [Accessed 02/03/2012] 43. THE ECONOMIST (2012) Swiss banking secrecy: Dont ask, wont tell *online+ Available at: http://www.economist.com/node/21547229 [Accessed 02/03/2012] 44. THE FINANCIAL TIMES (2009) Look for onshore, not offshore scapegoats. [online] Available at: http://www.ft.com/cms/s/0/f5c30872-0906-11de-b8b0-0000779fd2ac.html [Accessed 02/03/2012] 45. THE GUARDIAN (2009) How offshore capitalism ate our economies and itself. [online] Available at: http://www.guardian.co.uk/commentisfree/2009/feb/05/offshore-tax-havens [Accessed 02/03/2012] 46. THE HOUSE OF COMMONS: TREASURY COMMITTEE (2008) Offshore Financial Centres: Oral and Written Evidence. London: House of Commons 47. THE HOUSE OF COMMONS: TREASURY COMMITTEE (2009) Banking Crisis: International Dimensions. London: House of Commons 48. THE HOUSE OF LORDS: EUROPEAN UNION COMMITTEE (2009) Money Laundering and the Financing of Terrorism. London: House of Commons

15

49. UNGER, B. & FERWERDA, J. (2008) Regulating Money Laundering and Tax Havens: The Role of Blacklisting. Working Papers 08-12, Utrecht School of Economics 50. WOJCIK, D. & BOOTE, C. (2011) Tax havens: how globalization really works. Journal of Economic Geography, Vol. 11 (4): pp. 753756

16