The Hidden Wealth of Nations

Zucman, an economist, wrote a short book estimating how much household financial wealth is held offshore and setting out what could be done about it.

The methodological contribution is the estimation technique. Zucman uses a discrepancy in international investment statistics: if every country's reported foreign assets and liabilities were accurate, global assets would equal global liabilities. They do not. The world reports more liabilities than assets, which means securities are recorded as owed by someone to nobody. Zucman argues that this gap corresponds to wealth held through offshore intermediaries where the ultimate owner is not recorded, and uses it to estimate the offshore total at roughly eight per cent of global household financial wealth, around seven and a half trillion dollars at the time of writing, with the share substantially higher for Russia, the Gulf and Latin America than for Europe or the United States.

The historical sections trace Swiss banking secrecy from the 1920s, the growth of Luxembourg, the Caribbean centres and Singapore, and the mechanisms: shell companies, trusts, nominee arrangements and the fictitious relocation of profits by multinationals.

His policy proposals are specific. A global financial registry recording the ultimate owner of every security, built from the existing central securities depositories. Automatic exchange of information with verification rather than voluntary compliance. Trade sanctions against non-cooperating jurisdictions, calculated so that the cost exceeds the revenue those jurisdictions earn from secrecy. A unitary tax on multinationals apportioning profit by sales rather than by declared location.

The estimates depend on the assumption that the statistical gap is entirely offshore wealth, which other researchers dispute, and the figures have been revised in later work. The registry proposal has partly advanced through the Common Reporting Standard and beneficial ownership registers, with mixed enforcement.