Department of Economics and Business Economics

Safe havens in Europe: Switzerland and the ten dwarfs

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Eleven safe havens exist in Europe providing offshore banking and low taxes. Ten of these states are very small while Switzerland is moderately small. All 11 countries are richer than their large neighbors. It is shown that causality is from small to safe haven to wealth, and that theoretically equilibriums are likely to
exist where a certain regulation is substantially lower in a small country than in its big neighbor. This generates a large capital inflow to the safe havens. The pool of funds that may reach the safe havens is shown to be huge. It is far in excess of the absorptive capacity of the safe havens, but it still explains, why
they are rich. Microstates offer a veil of anonymity to funds passing through, and Switzerland offers safe storage of funds.
Original languageEnglish
JournalThe European Journal of Comparative Economics
Pages (from-to)377-396
Number of pages20
Publication statusPublished - 19 Dec 2013

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