The governance of black holes of the world economy
Recent financial history can be interpreted as a spiral of financial and economic crises and a set of regulatory responses to them. Over the past few decades this process has shown that the global financial system is adept at establishing alternative legal and quasi-legal spaces that circumvent national systems of taxation and financial regulation. About half of the global stock of money is routed through 'offshore' financial centres (OFCs), many of which are considered to be tax havens. The vast majority of wholesale banking takes place in unique quasi-legal spaces of the Euromarket and its various descendants. The chapter discusses the state of play and current plans for the governance of tax havens, 'offshore' finance and the shadow banking industry. The statistics associated with 'offshore' financial hubs and the scope of shadow banking practices suggest that the financial 'black holes' play a central role in today's global economy.