Wednesday, June 29, 2005

Globalization of Finance


Aussie dosh
Originally uploaded by Broken Piggy Bank.
Globalization of finance is harmful because it alters balance of power between regulators and large financial corporations being regulated. These large financial corporations will be able to evade regulator scrutiny and arbitrage between jurisdictions with a goal to conceal wealth.

Examples are tax heaven and the use of paper entities to evade liability. Profits are moved between accounting books from one country to another to avoid disclosure and escape tax. The arbitrage operation between jurisdictions require large financial corporations to create subsidiaries under their control in different countries which discourage average investors to fully understand the complicated accounts behind them.

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