In 1971 the government passed a banking law that allowed for a very liberal and open banking system, without any government agency of consolidated banking supervision, and confirmed that no taxes could be exacted from interest or transactions generated in the financial system. The number of banks jumped from 23 in 1970 to 125 in 1983, most of them being international banks. The banking law promoted international lending, and because Panama has a territorial tax system, profits from loans or transactions made offshore are tax free.

This, and the presence of numerous foreign banks, allows for international integration of the system. Unlike other Latin American countries, Panama has no capital controls. Therefore, when international capital floods the system, the banks lend the excess capital offshore, avoiding the common ills, imbalances, and high inflation that other countries face when receiving huge influxes of capital.

There are more than 120 banks in Panama City, making it a serious player in the international financial stage. Panama is the banking hub for much of Latin America.  Money flowing in and out of the region usually passes through Panama in order to make use of its low tax corporate structure and its stable financial system of banking. Panama's banking sector is one of the most dynamic areas of the economy. As of May 2003, Panama's 77 major banks reported total deposits of $24 billion, and $33 billion in total assets, an eight percent decrease from 2002. In 2003, approximately five percent of the total credit portfolio represented loans to the public sector. Loans to the private sector in Panama reached US$11 billion, or 95 percent of total credit.

It is difficult, if not impossible for a foreigner not located in Panama to open a bank account online. One may, via the internet, go through an intermediary to open an account; but in the final analysis one has to come to Panama in order to finalize the opening of the bank account. There are ways around this [under development]