According to the IMF, International Monetary Fund, an Offshore Financial Center (OFC) can be simply defined as any financial center where offshore activity takes place. However, there are more specifications. OFC is a center where the bulk of financial sector activity is offshore on both sides of the balance sheet, where the transactions are initiated elsewhere, and where the majority of the institutions involved are controlled by non-residents. More than that, OFC needs to meet the following requirements. For instance, jurisdictions that have relatively large numbers of financial institutions engaged primarily in business with non-residents; financial systems with external assets and liabilities out of proportion to domestic financial intermediation designed to finance domestic economies; and more popularly, centers which provide some or all of the following services: low or zero taxation; moderate or light financial regulation; banking secrecy and anonymity. Policy Support:
From the view of the Chinese government, it is quite clear that PRC want to turn Hong Kong to become the RMB offshore center. In the outline of the Chinese National 12th 5-years plan, it reflects the integrity of the national strategic planning, to further clarify the status and role in the country's overall development, provides strategic guidelines for the development of Hong Kong, and confirmed the support of RMB offshore market development in Hong Kong. In Aug 2011,the Vice Premier of PRC, Li Keqiang, visited Hong Kong and published a number of policy measures to reiterated its support for Hong Kong into an offshore RMB center. Several measurement were announced, expand the scope of the cross-border trade in RMB clearing to whole country; introduced Hong Kong portfolios ETF (Exchange Traded Fund) into Mainland; to carry out foreign banks...