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Environmental influences (7 areas in which a central bank may be…

- - - - Advantages
        
        pool resources
        
        diversification
        
        expertise
        
        lower dealing, administration and management costs
      - Disadvantages
        
        Additional layer of costs
        
        products offered might not meet exact requirements of investor
        
        products may be inflexible
        
        investor loses element of control over investment choice
- - - - Competitive pressure for countries to lower their tax rates
        
        Subsidiaries in high-tax countries heavily leveraged so profits after interest are very low
        
        Intra-group transfer pricing rates are set, which are inconsistent with market rates, leaving the profits in high-tax countries significantly lower
        
        Hybrid instruments are used, that lead to a tax deduction in one country and a tax liability in another to transfer taxable profits