Russia considers creating an offshore bank out of International Investment Bank

Russia considers creating an offshore bank out of International Investment Bank
Russian Deputy Prime Minister Igor Shuvalov has come up with a suggestion to create an offshore zone inside Russia in order to boost capital inflow from abroad.

Shuvalov suggested discussing the idea with the Russian Central Bank and the International Investment Bank, which in his opinion could be granted the status of a domestic offshore bank, Finmarket reports citing an unnamed source in the Finance Ministry. 

Creating a domestic offshore bank from the International Investment Bank (international bank of the socialist countries), which was established in 1970 as a bank servicing the socialist states, could boost capital inflow and help return funds of Russian origin back to the state from overseas tax havens. 

The International Investment Bank is a member of the national deposit insurance system. It already possesses an exclusive status, making it nearly an offshore bank, Interfax reports citing an unnamed source. For example the financial institution cannot be supervised by member states. It is also spared of taxes and protected from any judicial and administrative interference. It also has a diplomatic organization status. 

Now the list of the IIB member states includes Russia, Bulgaria, Vietnam, Cuba, Mongolia, Romania, Slovakia and Czech Republic. The bank is currently based in Moscow.

The IIB’s Chairman Nikolay Kosov sees the bank as a foundation in an international financial eenter in Moscow. Kosov said he believed the International Investment Bank is the “only full-scale international and multilateral development institution” in the Russian capital.

In late March this year Russian PM Dmitry Medvedev also spoke of the possibility of creating an offshore zone in Russia to entice capital from foreign offshore zones. The PM expressed the idea during comments on the economic turmoil in Cyprus. The head of the Russian government named Russia’s Far East, the Kuril Islands and Sakhalin in particular, among areas that could be made an offshore tax haven.