Better known as ‘tax havens’, offshore financial centres—such as the Cayman Islands or Panama—are ‘jurisdictions that oversee a disproportionate level of financial activity by non-residents. Financial activity in them is usually dominated by the provision of intermediation services for larger neighbouring countries…By providing competition for domestic banks, offshore banks also (inadvertently) lower the costs for anyone using the domestic financial system. For example, simply by being close to Andorra and Monaco, France has a more competitive banking system, which provides more credit at lower interest rate spreads. Such indirect competitive benefits of offshore financial centres more than offset their costs’ (Rose and Spiegel (2007) Econ. J. 117, 523, which see).