ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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MEDICAL RESEARCH-Credibility at Stake

proposed OBUs for the domestic economy are likely to be far-reaching. Banks, particularly international banks, are naturally very enthusiastic about integration of offshore and onshore operations, or at least permitting some 'seepage between the two, so that the domestic- segment can use the offshore market as a cheap source of funds to be deployed in the inter-bank market and generally lent to domestic borrowers. This can, however, operate as a significant constraint on domestic monetary and financial policies and it is for this reason that the US and Japanese authorities have refused to allow full integration of the offshore and domestic markets. What is more, experience has shown that even in well developed centres, separation of the domestic and offshore markets has been difficult to achieve and banks manage to surreptitiously channel cheap offshore funds into the domestic interbank market, for instance by transferring deposits taken on their offshore books to their branches and transferring them back as inter-bank deposits free of withholding taxes and reserve requirements.

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