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Contents

• The concept of "tax haven" offshore financial center
• Strong overlapping and complementary circuits and conventional offshore
• CFO of financial integration and propagation of systemic risk

The financial crisis has highlighted the role played by the banking system "ghost" - a term that covers most of the unregulated financial players - in the spread of systemic risk. Some of these institutions took advantage of workarounds to regulation by domiciliant in offshore financial centers. The usual concept in France of "tax haven" in fact became too limiting to describe territories which are also a source of escape regulatory and case law. Offshore financial centers (OFCs) or "prudential paradise" are thus seen as a "fault lines" of macroprudential supervision necessary for the stability of the financial system. How to avoid them are blind spots in financial regulation?

Despite evidence underlining their role in opaque financial strategies, lack of operational data and analysis often prevents going beyond the denunciation of some states. This paper aims to identify the concept of "CFO", blurring the legal point of view, exploring their role as data showing production of financial engineering for the rest of the world. It provides an overview of the degree of overlapping of offshore centers in conventional financial markets, important during the crisis and leading to several recommendations of financial regulation.

To erode their attractiveness, a solution for the regulator is to increase the cost of banks' exposure to these conventional circuits "derogatory". It is first to organize a fiscal oversight, legal and prudential these centers and financial innovations that developed there. Monitoring transactions of regulated institutions with the least regulated also requires the ability to measure their exposure by residence of counterparties, to ensure that they have sufficient coverage in terms of positions considered risky .

• Author: Caroline Le Moign , Department of Economics, Finance Strategic Analysis Centre.

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