Evolving Nature and Scope of Activities

Abstract

Almost all of the financial centres considered in this book have developed since the 1960s in response to the globalization of capital markets and wealth generation. They have also benefited from restrictions imposed to limit international capital flows and to improve balance of payments in the host countries. Particularly prevalent in the US, the relevant policy actions included greater reserve requirements for banks, binding interest rate ceilings, and restrictions on the range of products and services that banks could offer.¹ More generally, several developed countries, most notably the UK, implemented tax hikes in 1960s and early 1970s, especially on corporate income and investment earnings. These developments led financial institutions and businesses to look for alternative venues, to conduct their transactions elsewhere.