Geography Reference
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protection (insurance), investment consulting, international tax planning,
and trade
shore banking is
relatively capital-intensive when compared to the labor-intensive headquarters
in global cities: for example, in the Cayman Islands, the world's largest center
of of
fi
finance (e.g., letters of credit). Employment in of
ff
finance, Roberts (1995) notes that 1,000 foreign banks employ
only 538 people; most are “brass plate” or shell banks. The high degree of
capital intensity in this case speaks to the hybrid nature of of
ff
shore
fi
shore banks,
which combine computers, software, buildings, and an occasional worker to
form actor-networks that vary from place to place.
Conventional geographic preoccupations with proximity mean little in this
case, for the topologies of global of
ff
finance are formed and deformed
in ways that the language of location theory cannot capture. Due to global-
ization and the Internet, distant countries are now just a mouse-click away.
Rather, it is the political economy of actor-networks in question that is cen-
tral to the evolving spatial distribution of the low value-added segment of the
global service economy. O
ff
shore
fi
ff
shore centers are the “black holes” in the global
topography of
financial regulation, a status that emanates directly from the
enhanced ability of large
fi
financial institutions to shift funds electronically to
take advantage of lax regulations, freedom from taxes and currency controls,
and other restrictions to be found on the periphery of the global
fi
financial
system. As the technological barriers to moving money have fallen, allowing
digital money to circulate at will, legal and regulatory ones have increased in
importance. As Harvey (2001a) emphasizes, globalization does not eliminate
local di
fi
ff
erences, it accentuates them. Even relatively minor di
ff
erences in
regulations concerning corporate taxes or repatriated pro
ts may attract or
repel large quantities of capital, causing it to enter, or exit, particular places.
Hudson (2000) argues that o
fi
ff
shore banking is rede
fi
ning national sover-
eignty, uncoupling political and
fi
financial control from the territories that
long held sway over
fi
financial institutions.
ered from the cloud of suspicion
that they constitute little more than havens for tax evasion and money-
laundering of illicitly obtained funds. As electronic money has come to
dominate global
O
ff
shore banking centers have long su
ff
shore banking centers for illegitimate
purposes has grown apace. Indeed, just as large corporations can use the
Internet and
fi
finance, the use of of
ff
fiber optics to move funds from place to place, so can actors in
the “dark side” of the global economy, including tax evaders, drug cartels,
arms tra
fi
cials. Given that they
often occupy the boundary between “legitimate” and “illegitimate”
ckers, terrorists, and corrupt government o
fi
financial
activity, a key issue in the success or failure of of
ff
shore banking centers is
the degree of con
dentiality that investors feel they can obtain. Indeed, the
investment reliability of of
fi
shore banking centers is often judged by the
quality of laws protecting the privacy. The use of shell companies, including
holding corporations and increasingly, foundations, blurs legal lines of lia-
bility, keeping insurance rates low, and protecting assets (both legal and
otherwise) from public scrutiny through deliberately impenetrable webs of
ff
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