THE traditional role of an offshore banking market is to provide a tax-friendly investment environment, and a place for banks to accept funds and borrow money without meeting local reserve requirements.
In major offshore centres, such as London, the market also acts as a base for equity funds and private banking facilities.
However, this is not the case in Japan, where the Japan Offshore Market (JOM) has developed without fund management, private banking, or many of the regulatory freedoms taken for granted elsewhere.
Despite this, the six-year-old JOM has grown quickly, overtaking Hong Kong and other centres to rank second largest in the world after London.
Japan now has 204 banks operating with offshore licences, of which 116 are Japanese.
By May of this year, the total asset balance of the JOM stood at US$607.7 billion - nearly double the size of the offshore market in Singapore and about 15 per cent bigger than Hong kong.