Tax Havens and the Financial Crisis

From offshore havens to financial centers, banking secrecy faces scrutiny.


By Rachel Keeler
May/June 2009
Dollars & Sense: Real World Economics


When an entire global financial system collapses, it is reasonable to expect some bickering over the ultimate fixing of things. Rumors of dissention and talk of stimulus-paved roads to hell made everyone squeamish going into the April summit of the G20 group of large and industrialized nations in London. French President Nicolas Sarkozy even threatened to walk out on the whole thing if he didn’t get his way.

The French were perhaps right to be nervous: they were taking a somewhat socialist stand, declaring that unregulated shadow banking and offshore tax havens were at the heart of the financial crisis and had to be either controlled or eradicated. They were doing it in a city at the center of the shadow system, and at a summit chaired by British Prime Minister Gordon Brown, a man recently described by the Financial Times as “one of the principal cheerleaders for the competitive international deregulation of international financial markets.â€