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Banking in the Global Economy of the 21st Century

The foundation upon which the global economy always has been based is the banking system. Over the course of the past two decades, there have been some significant developments that have effected the banking system in relation to the global economy.

In the past, there were countries through which the banking laws provided business customers and even people doing personal banking with significant privacy options. Indeed, historically there were nations through which a business or individual could engage in banking completely in secrecy. As a result, there were businesses and individuals who were engaged in the global economy on different levels who tended to take advantage of some of the different banking options that allowed for an enhanced level of banking privacy.

In the global economy, businesses and individuals have taken advantage of these banks in the past, banks that provided tremendous walls of privacy. (Indeed, there were banking institutions that did not even require a person to identify his or her self -- or a particular business enterprise -- in opening and launching an account.) While there were many reasons why these types of bank accounts were sought out, one of the primary reasons individuals and businesses sought out these accounts was to better positions in regard to taxes.

Over the course of the past five or six years -- to a significant degree in a response to terrorism that seems to be erupting around the world -- the banking laws have tightened. In many countries that traditionally had a great deal of privacy protection associated with bank accounts, laws have been passed that are providing more transparency at least when it comes to governmental agencies and officials.

In addition, when it comes to companies involved in the global economy, a growing number of countries have enacted laws that restrict the manner in which these companies can undertaking banking relationships abroad. This type of legislation has arisen in response to the fact that many business enterprises involved in the global economy were able to avoid domestic taxation through using the international banking system. Governments in many countries have taken steps to clamp down on this particular loophole in order to increase the tax liability of these business enterprises in their home countries.

In the future, banking will remain a fundamental part of the overall global economy. Nonetheless, the manner in which individuals and businesses can access banks in the international arena is changing and is likely to continue to change over the course of the coming decade. Terrorism and taxation will continue to be two of the primary forces in international bank reformation in the global economy today and into the future.