Recent years have seen increased competition between countries in the field of financial systems, including taxation. Some countries have been successful, others not, still others have not even responded to the challenge.

One of the most fascinating contemporary developments is the growth of Eurocurrency markets, e.g. markets where instruments denominated in a foreign currency (in terms of the country of transaction) are traded. Financial centres such as London, Luxembourg or the Cayman Islands have received wide coverage in literature. By contrast, little attention has been given to special Eurocurrency zones. Those zones allow for deposits to be accepted and loans granted in the domestic currency, but along the lines valid for a foreign currency. Apparently governments are finding it difficult to design principles of operation for those zones in a way which would secure unaffected conduct of monetary policy; or perhaps they are simply not too interested in liberalising the operations of their banks - as only a handful of them have so far chosen to single out such zones. The best known of those are the American International Banking Facilities or the Japanese Offshore Market. Other countries have established the zones, but banned operations in the domestic currency (Bangkok International Banking Facilities in Thailand, Labuan International Offshore Center in Malaysia). The paper seeks to assess, with the example of the American zone, the advantages and difficulties involved in the functioning of the zones and to explain why their development - both in terms of numbers and the scale of operations - has been so disappointing so far.