Access to Politically and Financially Stable Banking Services

• One theoretical advantage of offshore banking is the ability to transfer capital from an insecure location to a more secure offshore location, in response to local political or financial instability. In a situation where the domestic banking industry appears unstable or unreliable, offshore banks can accept deposits from locals and therefore guarantee deposit safety. However, the use of offshore banks during this crisis can bankrupt the local economy, providing a convenient counter-argument to this so-called advantage of offshore banking.
  
  

Example of Accounts Used as Access to Stable Markets

• One example of offshore banks being utilized to theoretically provide access to stable markets in times of economic duress can be seen in Argentina in 2001, after the corralito or "little enclosure" measures taken by the Argentinian government under economic minister Domingo Cavallo. In response to fears of an economic crash before December 2001, Argentinians withdrew dollars from domestic banks in large amounts and transferred them to offshore locations. This depleted the capital of the Argentine economy, threatening to lead to bank runs and economic collapse. In response, on December 1 the government froze all bank accounts under the corralito. It can be argued that even though offshore banks did guarantee security for deposits during the period before the corralito, the capital flight resulting from the availability of offshore options actually worsened the depression by forcing the government to freeze accounts using government measures.
  
  

Lower Costs, Higher Interest

• Offshore banks typically operate and flourish in those places where taxation laws allow for tax avoidance (and lower costs). The term "tax haven" is used to denote a region that has characteristically low taxes, fewer regulations for taxation procedures or other taxation policies that favor cost-breaks to business (and that are often designed to attract business activity). By operating at lower costs, offshore banks may be able to offer higher rates of interest than in the home country.
  
  

Suitability as an Industry for Remote Island Locations

• Offshore banking/finance is one of the rare industries in which remote island locations can compete in the competitive world marketplace. This is one way in which world wealth can be spread into the developing world at relatively low transaction cost (business activity rather than government transfers).
  
  

Less Regulation, More Opportunity

• Not only do offshore banks let banks escape from tax laws and other government revenue programs which raise the cost of doing business, they allow these banks to escape from other forms of costly legislation. As a result, offshore banks can offer such unique banking services as anonymous bank accounts, different rates on risk-assessed loans, and investment opportunities. In addition, offshore banks use their lack of regulation to link themselves with other business entities such as trusts, foundations, or foreign nations.