Offshore financial centers focus on offering banking and other financial services to non-resident customers. Many of these centers are located on island states such as The Bahamas, Bahrain, the Cayman Islands, Bermuda, the Netherlands Antilles and Singapore. Luxembourg and Switzerland although not islands are also important "offshore" financial centers
Multi-National Corporations (MNCs) always use offshore financial centers to obtain low-cost Eurocurrency loans. Many MNCs locate financing subsidiaries in these centers to take advantage of the benefits they offer such as
- Political stability
- Regulatory climate that facilitates international capital transactions
- Excellent communications link to other major financial centers
- Availability of legal, accounting, financial and other expertise needed to package large loans
The efficiency of offshore financial centers in attracting deposits and then lending these funds to customers worldwide is an important factor in the growing globalization of the capital market.