Benefits of Offshore Banking [Offshore Accounts]

Benefit #1: Access Safer Banks
If you’re new to offshore banking, it might be hard to believe that offshore banks are safer than those banks in your home country. This is called “home bias,” and it’s a normal fault. It happens when you think that something is “better” simply because it originates in your home country.

But, we don’t have to look far for proof that this is wrong. Before the last financial crisis, most Americans would say that US banks were the best in the world. But then the world learned the hard way that US banks exposed depositors, and the country, to serious financial risk.

In fact, since 2008 the Federal Deposit Insurance Corporation (FDIC) had to bail out 531 different banks in the United States. Banks even failed in 2019, while the stock market was booming, the economy was strong, and unemployment was low.

Today, many banks in Western countries are fundamentally unsound. Here are the core reasons for this:
Banks in Western countries tend to maintain very low reserves and operate on low levels of liquidity. They do this because they can, because bank customers are uninformed, and because that’s how their current business models function. Instead of focusing all of their attention on delivering services and generating revenue from fees they make money by risking depositor money on bad loans and high-risk investments.

Many banks in the Western world are in horrible financial health. But, you can still find safe banks offshore. Banks abroad tend to be fiscally responsible, well-capitalized, have strict liquidity and capitalization requirements, operate safe business models, and invest more conservatively.

In other words, foreign banks are safe because they’re in far better financial shape and operate far more conservatively than banks in major Western countries.

To learn how to find the best offshore banks read our Ultimate Guide to Offshore Banking for FREE here.

Benefit #2: Access Safer Banking Systems
Safe banks are the byproduct of safe banking systems.

For example, Singapore has never had a bank failure… ever. And that’s in large part to the fact that Singapore has a very well-managed, fiscally responsible banking sector.

But Singapore is just one of many examples. Safe offshore and international banks are the result of sound banking systems. Sound banking systems legally require banks operating within their borders to be financially healthy and be fiscally responsible. They can’t invest depositor funds carelessly. They have to have certain capitalization and liquidity rates. Banks that don’t follow the rules lose their banking licenses and cease to exist.

Whether you’re considering the traditional offshore accounts of Switzerland or Liechtenstein or more modern versions of offshore banking in Panama or Singapore, many offshore jurisdictions have solid banking systems.

In fact, while Hollywood, Western governments, and the media would prefer you to think that offshore banking is unsophisticated and shady, it’s actually the opposite. Because many offshore jurisdictions are heavily dependent on offshore financial services, it’s important that their banks are fully compliant, efficiently run, and regulated in a way that is sustainable and makes financial sense. After all, one banking scandal can ruin the economy.

Additionally, while many offshore banking jurisdictions do not offer deposit insurance, it’s rarely needed.
In fact, the absence of deposit insurance can encourage better banking practices and healthier banks. Without the “back-stop” provided by the FDIC or similar deposit scheme, there’s more pressure to maintain a healthy, well-regulated banking sector. If banks risk depositor money on flagrant investments or make fiscally irresponsible moves, they could damage the entire economy.