The focal point of international finance operations and the institution that played a key role in financial globalization are international banks. These banks and banking operations are involved with permitting foreign businesses and individuals use their financial services. Financial services can include setting up payment accounts and providing lending opportunities. Because more people are engaged in global financial endeavors, it is only natural that the services of global banks are in great demand. There are many countries that have established banks that focus on international operations.
There are many reasons why businesses and individuals take advantage of global banks. For instance, many businesses and individuals will use the services of global banks to evade paying taxes in their home country. Companies will use international banks to expand their business internationally. There are many countries that have no or very low estate and income taxes. There are companies and individuals that will utilize intercontinental banks to make global investments. For instance, someone may want to invest in a country that has a booming housing market.
There are wealthy people who keep their money in foreign banks to protect it from lawsuits so they will not go bankrupt if they sued. The attractive interest rates make using intercontinental banks very lucrative. Intercontinental banks lend and borrow on worldwide markets so they are not as affected by fluctuations in domestic interest rates. As well, some intercontinental banks will offer better interest rates than domestic banks. It is much easier to do business globally when you use an intercontinental bank. For instance, a business will have just one bank account instead of many bank accounts in different countries. As well, intercontinental banks provide many financial services that help promote worldwide trade.
Different types of International Banks include:
Correspondent Banks: These banks have a relationship with two or more banks which includes banks in different countries. These banks are useful for global business endeavors.
Foreign Branch Bank: These banks are located in another country that is not their home country. They have to follow that country’s banking regulations.
Subsidiary Banks: These banks are incorporated in one country, but are owned by bank in another country.
Offshore Banking Center: The commonly known offshore banking center is the Swiss Bank Account. The banking centers permit foreign accounts that operate independently of the host countries banking regulations.
There are number of issues that must be considered when banking internationally. You have to make sure that exchange rates do not affect profits negatively. You also have to make sure the bank is located in a stable country, that is, economically, and politically. You also want to make sure you do not bank in country that is a risk of violence and a military coup.
When deciding if you will uses the services of an international bank, it is important to learn about the host’s countries rules and regulations as well as interest rates and service fees. Intercontinental banking is very beneficial for business and individuals seeking to engage in global business.
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