Interference of transnational banks' off-shore borrowing with domestic monetary policies

A matter of concern to governments, both of developed and developing countries, is the effect on domestic monetary policies of off-shore borrowings of foreign branches for their parent banks. For example, where central banks emphasize the use of reserve requirements to control aggregate increases in the money supply and credit, and when such inflows are not included in the liability base for the requirement, these can give rise to unexpected credit expansion.