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The origins of the Asia dollar market 1968–1986: regulatory competition and complementarity in Singapore and Hong Kong

Published online by Cambridge University Press:  26 May 2020

Catherine R. Schenk
Catherine R. Schenk*
Affiliation:
University of Oxford
*
Professor Catherine R. Schenk, University of Oxford, St Hilda's College, Cowley Place, Oxford IX4 1DY, email: catherine.schenk@history.ox.ac.uk.
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Abstract

Offshore financial centres have attracted considerable critical attention over the past few decades as havens for lightly taxed funds that circulate outside the regulatory oversight of major financial centres. This article addresses the emergence of an offshore market in US dollars in Singapore from the late 1960s using a range of archival sources to identify the motivations of the host, participant banks and regional rivals. The development of the Asia dollar market is particularly striking because Singapore was not the most likely venue for an Asian offshore financial centre. The main regional financial centre was Hong Kong, but the Hong Kong authorities made a deliberate choice not to host an offshore market in Hong Kong, a decision that was initially supported both by the state and by incumbent banks, although the banks later changed their view as the Singapore market grew. This case thus opens up discussion of the influence market actors exert over regulators when they are engaged in regulatory arbitrage as well as regulatory competition between states. Evidence is also presented about the efforts of the Bank for International Settlements to encourage greater transparency in offshore financial centres in the 1980s.

Keywords

offshore financial centreSingapore financial centreHong Kong financial centreregulatory competitiontax haven

JEL classification

N25: Asia including Middle East N15: Asia including Middle East F38: International Financial Policy: Financial Transactions Tax; Capital Controls G15: International Financial Markets N20: General, International, or Comparative
Type
Articles
Information
Financial History Review , Volume 27 , Issue 1 , April 2020 , pp. 17 - 44
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Copyright
Copyright © European Association for Banking and Financial History e.V. 2020

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Footnotes

The research associated with this article was partly funded by Humanities in the European Research Area Joint Research Programme 3, Uses of the Past, and received funding from the EU's Horizon 2020 under grant agreement 649307. The author would like to thank anonymous referees for their helpful comments and suggestions.

References

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Federal Reserve Bank of New York Archives, New YorkGoogle Scholar
Historical Archives of the Bank for International Settlements, BaselGoogle Scholar
HSBC Group Archive, LondonGoogle Scholar
HSBC Asia-Pacific Archive, Hong KongGoogle Scholar
Hong Kong Public Record Office, Hong KongGoogle Scholar
International Monetary Fund Archives, Washington DCGoogle Scholar
Lloyds Bank Group Archives (Bank of Scotland), EdinburghGoogle Scholar
National Archives of Singapore, SingaporeGoogle Scholar

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