Note that in our definition, we defined a stable financial system as a system that prevents shocks from having a disruptive effect on the real economy, but also on other financial systems. The latter part of this definition has become more relevant as financial systems have become more interrelated. The importance of OFCs for international financial stability can be illustrated by a few figures.
In the first quarter of this year, BIS reporting banks’ claims against OFCs comprised almost ten percent of their total cross-border claims, creating a total risk exposure of almost 400 billion US dollars. These exposures are larger if off-balance-sheet activities are taken into account. In addition, insurance corporations and investment funds also use OFCs. Unfortunately, information on these off-balance and non-bank exposures is scarce.