To: cypherpunks@toad.com S >The middle class avoids current offshore banking because it S >is user-hostile and puts their life savings at high risk. The middle class avoids current offshore banking because they want to be close to their money and because they have not (traditionally) had anything to do with foreign investments or even foreign travel (only 14% of Americans possess passports). S >An offshore bank often takes a week or more to service requests for S >statements sent by snail-mail. True, although all had telex and have fax and Americans have been able to use telex from their home computers at least since 1983. Fedex also serves almost all offshore financial centers. S >Offshore banks are notorious for obsconding with customers' money. There is no evidence that offshore investment risk is higher than onshore risk (US government deposit insurance not counted). Recall that you can lose money even in an FDIC insured deposit account in the US as the *average* depositor did over the last 10 years when account interest is adjusted for inflation/opportunity cost. S >Reputation information on these banks is hard to find to nonexistant. So if I open an account at the Cayman office of the Bank of Nova Scotia, I have no way of telling that it is safe. Most of the money in offshore banks is invested in subsidiaries of onshore banks. There are six major clearing banks in the Cayman Islands: Barclays Bank, Royal Bank of Canada, Bank of Nova Scotia, CIBC Bank and Trust Company (Cayman) Ltd, Cayman National Bank and Trust Co Ltd, and Bank of Butterfield (Cayman) Ltd. Of these, 4 are subsidiaries of major international banks, Bank of Butterfield is a banking subsidiary of one of the largest trust companies in Bermuda (with a good rep), and Cayman National Bank and Trust (a member of the Cirrus ATM network BTW) is 25 years old. S >The typical offshore bank customer spends $1,000's on legal fees to S >obtain information on reputable banks, the legality of what they are S >doing in both the local and offshore jurisdictions, and to set up S >obscure, sophisticated legal entities. There aren't any good S >statistics, but I'd guess that most of the money saved by going S >offshore is lost to legal fees and fraud. Sounds like market failure to me <G>. I guess that when First Wisconsin Oshkosh opened *its* Cayman subsidiary, it was taking unwarranted risks with its customers money. I guess the people that put together all those film financing deals via the Netherlands Antilles must be kind of credulous since they are going to lose their dough. Trusts and corporations are not "obscure legal entities" BTW. S >A good on-line bank will tackle user friendliness by providing rapid, S >detailed feedback, True. S >Trust could be more directly tackled by the following: S >* Private deposit insurance, with risk spread across several S >offshore banks Already in place in some jurisdictions. S >* Offshore bank rating service, also available online Loads of those now but not online. S >* Sponsorship by major banks, with a longer-term reputation S >and larger capital base Already the most common way of doing business offshore. The main reason that Americans haven't opened foreign accounts is distance, transaction costs, and the costs of information. The nets eliminate distance and cut costs of transaction and information. DCF --- WinQwk 2.0b#1165