All-in-all, chances are that the fiscal authorities in the host country will not be interested in providing bail-out to the uninsured creditors of such a bank if it were to fail. In death, as in life, it will remain largely offshore. This is the situation that characterises classic offshore banking.
Nevertheless, much of today’s international banking involves deeper interactions between the banks and the national economy, and as such entails macroprudential risks. Lending Take lending. This is the most familiar source of leakage of international finance into the domestic economy.