Seen from offshore, the shape of the contemporary international economy appears quite different from the conventional view. Some of its most fundamental elements appear bigger – for instance the amount of US dollar created offshore – or smaller – for instance the volume of foreign direct investment – than standard statistics suggest. That is, despite a growing body of research, important elements of the offshore economy remain invisible for researchers and the general public alike. What has become clear, however, is that offshore financial services are a central part of the international economy. They are used by wealthy individuals and corporations regularly and on a large scale. The purpose is to access credit not available onshore, to minimise tax bills, to avoid government regulations and to obscure legally and illegally made fortunes. Against the background of an offshore economy that is large in volume, but small in visibility the dissertation asks: How does offshore finance affect the power of the state to unite resources in order to finance its politics? The inquiry into the power relationship between offshore finance and the state immediately raises questions about the nature of the modern state and the delineation between the offshore and the onshore economy. To avoid getting lost in the theory of the state or impoverishing the analysis by ignoring the concept altogether, I develop an analytical perspective that I call ‘the money view’ on the state by employing Max Weber’s concept of the modern state in combination with Geoffrey Ingham’s notion of sovereign money. The money view considers state power to be a function of the debtor-creditor relationships between the government, taxpayers and financiers. Regarding offshore finance, the thesis starts from the premise that offshore centres are tax havens and international banking hubs reflecting the intrinsic connection between taxation and banking through sovereign money in the onshore economy. Within this analytical frame, the thesis conducts a historical comparison across four cases: Britain, Germany, Mexico and Brazil. For each case, I determine the scope and pattern of the demand for offshore financial services based on international banking statistics and qualitative interviews. The findings are contextualised in a historical institutionalist analysis of taxation and banking in the respective country. These two analytical steps are then combined to determine the effect of offshore finance on state power.

The thesis finds that the relationship between offshore finance and state power varies from country to country. Yet, across all cases offshore money creation in the Eurodollar markets is more consequential for the power of the state than is offshore tax planning.