Which statement best describes an offshore bank?

• A. Banks that only buy and sell foreign currencies
• B. Banks that lend to local residents only
• C. Banks that provide only checking accounts
• D. Banks that invest in local government bonds

Answer: (A)

Offshore banks are financial institutions located outside the account holder’s home country, often serving international clients and handling cross-border transactions and foreign currencies. Because a key feature of offshore banking is dealing with foreign currencies and international money activities, the statement that best fits describes banks that buy and sell foreign currencies. The other options describe services more typical of a domestic bank—serving local residents, offering a limited range of products, or investing in local government bonds—rather than the cross-border, currency-focused work that characterizes offshore banking.