Global financial centres after the crisis

- Financial market size: "Traditional centres lose market shares, emerging markets up-and-coming. US and EU financial markets continue to provide around three-quarters of global financial services, albeit, after the crisis, at substantially lower overall levels of market activity in many market segments. Emerging financial markets, especially in Asia, have grown strongly in past years and are set to accelerate their catch-up process."
- Financial centre competition: "Established centres static, new centres rush up the league tables. Traditional financial centres are repeatedly found in top ranks as regards their international competitiveness, typically including London, New York, Hong Kong, Singapore, Tokyo, Chicago, and Zurich. Their competitiveness ratings have not changed significantly over the past years. Emerging financial centres such as Beijing, Seoul, Shenzhen, Shanghai, and Dubai have improved their global ranking strongly since 2007, raising their competitiveness ratings by 42% for Seoul, 27% for Beijing, 22% for Mumbai, and 16% for Shanghai."
- Europe: "Single financial market, but ailing financial centres. European financial market places are falling behind in the rankings. Cities such as Paris, Madrid, Milan, Frankfurt, Amsterdam and even London, have clearly lost ground compared to other advanced and emerging locations, and seem to be missing opportunities to enhance their competitiveness."
- Four drivers of financial centre competitiveness after the crisis:
1. Big is beautiful – and will remain so. "London, New York, Hong Kong, and Singapore are set to remain strongholds of global finance after the crisis, building on existing market strength and favourable economic conditions."
2. Towards a multi-polar financial industry. "In the long-run, emerging financial centres are likely to succeed in establishing the scale and scope in their market environment that will help them advance into the top group of global locations. The crisis may accelerate this trend."
3. National focus as transitory advantage for smaller centres. "Local and regional financial market places may hope for continued relevance owing to the re-focusing of market participants and policymakers on their national markets. However, this tailwind will likely be of limited duration."
4. Good regulation as a competitive advantage. "Providing a good regulatory framework will be a key determinant of competitiveness going forward. Financial centres not compliant with international rules are faced with increasing political pressure and stigmatisation. Well-regulated financial centres may be considered as safe havens. But increasing regulatory density may also give rise to regulatory arbitrage. Financial centres need to analyse the impact of regulatory developments and decide which types of business and business practices they wish to host in their location."

DeutscheBank EU Monitor 20100802

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