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October 15, 2008 (LPAC)--Speaking at the parliamentary debate on the French part of the banking rescue plan, French Prime Minister François Fillon opened a new flank for economic sanity by pointing to the role of funds and offshore banking in the the current global crisis.

Today's French economic daily La tribune writes: "While the French president [Sarkozy] calls for a New Bretton Woods, the PM called for the banning of offshore banking, the black holes of international finance." Although he did not mention British domination of these entities, Fillon said that "Shutting them down has to be the prelude to the re-founding of the international financial system."

Fillon's call results from a real outcry of elected officials and professionals who see offshore banking and Over The Counter (OTC) derivatives trading as the next domino threatening the entire financial system. Quoted by Le Canard Enchaîné, Daniel Lebègue, former number two man at BNP Paribas and former head of the French Caisse des Dépôts (the French equivalent of the German Kfw), said that he fears that "a chain reaction collapse of the hedge funds could be the next flaw of the financial system."

According to La Tribune, in a letter sent on Monday to the members of Parliament, Lebègue wonders why neither the G7 neither the IMF nor the Eurogroup, made any reference to one of the worst threats to the financial system: the tax heavens and offshore banking centers. Lebègue points out the "sales route" of the sub-primes: first they were forced down poor people's throats; then they were bought by unregulated investment banks which sold this crap to hedge funds based in offshore banking centers, which recycled these toxic assets by selling them to regular commercial banks.

France is worried, since "half of the financial products offered to simple depositors are created by hedge funds residing in off shore banking centers where regulation is close to non existent." The explosion of the OTC Original banking, such as the securities market, was build for a large part on the development of offshore banking. Today, over 400 banks, two thirds of some 2000 hedge funds and two million empty shell financial entities are located in off shore banking centers, managing about 10 trillion dollars, writes La Tribune.

To address this problem, French Budget Minister Eric Woerth will bring together 20 colleagues of the EU in Paris on October 21, in the framework of the OECD, to elaborate a common response against offshore banking and tax evasion.

From his side, French Socialist MP Arnaud Montebourg sent a set of guidelines to fight offshore banking to Fillon, suggesting that "if by any chance the Fillon government doesn't succeed to convince the member states of the EU to suppress these disloyal practices, I'll advise them to act they way General De Gaulle did in 1963 with Monaco, by organizing a customs blockade which forced Monaco to obey."