Offshore Banking Unit - OBU

DEFINITION of 'Offshore Banking Unit - OBU'

A shell branch located in an international financial center. Offshore banking units (OBUs) make loans in the Eurocurrency market when they accept deposits from foreign banks and other OBUs. OBUs' activities are not restricted by local monetary authorities or governments, but they are prohibited from accepting domestic deposits.

BREAKING DOWN 'Offshore Banking Unit - OBU'

OBUs have proliferated across the globe since the 1970s. They are found throughout Europe, as well as in the Middle East, Asia and the Caribbean. U.S. OBUs are concentrated in the Bahamas, the Cayman Islands, Hong Kong, Panama and Singapore.

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