Britain

Abstract

Britain holds a special place in the offshore world. Unlike any other country, it is at once a high tax country, a large economy, and an offshore banking centre. From the inception of the Eurodollar in the 1950s to the onset of the global financial crisis in 2007, offshore finance strengthened British state power. The politics of the invisible helped to keep domestic capital engaged in financing the state despite the expansion of mass democracy and the welfare state. At the same time, it obscured the structural privileging of large economic actors over everyone else. The centrality of the City of London in the Eurodollar system also afforded the British state international influence beyond its actual political and economic weight. However, when in 2007–09 the global financial crisis—rooted to a significant extent in the offshore dollar markets—hit the country with full force, the relationship between offshore finance and state power turned destructive. The crisis laid bare the fragility of offshore money creation and the politics of the invisible. British state power became contested simultaneously from within and by foreign governments. For Britain, offshore money creation has been more consequential than offshore tax planning and money laundering.