It's no secret that the majority of foreign exchange transactions in the world are carried out thanks to special banking and various other commercial institutions. It is through them that colossal cash flows pass, ensuring the stability of not only states in general, but also individuals in particular. Any modern global financial center is a place where transactions worth billions are carried out. In this article, we will take a closer look at all the features of these "gold veins".
Definition
First of all, we point out that the global financial center is a point of concentration of various banks, financial and credit institutions that perform international financial, credit, foreign exchange transactions, and also work with gold and securities.
Before the First World War, London was considered the strongest financial center, which at that time was the Mecca of European capitalism. However, after the end of the war, the United States of America seized the palm, and already starting from the 1960s, the US positions were significantly weakened, as new centers were formed in Japan and Western Europe.
Some information
Every global financial center isoperating market mechanism of international importance, actively managing financial flows. To date, the countries of the European Union have somewhat strengthened their positions and become less dependent on the United States, which allowed London to once again take a dominant position on the European continent.
All global financial flows move through the so-called channels, including:
- maintenance of sales transactions and services;
- currency and credit services;
- injection of investments in fixed and working capital;
- dealing with securities;
- transformation of a certain part of the national income through the budget in the form of assistance to various developing states.
The best of the best
The ranking of global financial centers in 2016 is as follows:
- London.
- New York.
- Singapore.
- Hong Kong.
- Tokyo.
- Zurich.
- Washington.
- San Francisco.
- Boston.
- Toronto.
Each of these giants of the global financial structure is worth considering separately.
Canadian miracle
Toronto is the largest city in Canada and, concurrently, the administrative center of the province of Ontario. The financial district of the country is physically a very densely built-up business districts, in which numerous banks, the main offices of the largest companies, accounting and law firms, and brokerage companies are "housed".
Main City of Massachusetts
Boston is the largest city in the US region called New England, the oldest and richest city in the country.
The main sectors of Boston's economy include insurance, banking and finance. The city is home to the headquarters of Fidelity Investments, Sovereign Bank and State Street Corporation.
Home of Silicon Valley
San Francisco is a city with a rapidly growing economy, which is largely due to the presence of a global center of excellence not only in the world of finance, but also in the biotechnology and biomedicine industries.
City's Small Business Commission backs campaign to keep small business share. Because of this, the city council was forced to impose restrictions on areas in which supermarkets can be built. This strategy was supported by the population of the metropolis, who voted for the entry into force of restrictions.
Important point: small companies with less than ten employees make up about 85% of all existing businesses in the city.
American Capital
Washington is primarily the place where the largest concentration of government managers and workers involved in the service sector.
Many companies, firms, independent contractors, non-profit organizations, trade groups seek to locate closer to or in Washington DC in order to lobby their interests as effectively as possible, while being as close as possible to the federal government.
BWashington is home to two of the world's largest companies by revenue: the mortgage agency Fannie Mae (annual turnover of $29 billion, 270th in the world ranking), and the US Postal Service ($68 billion, 92nd).).
European Center
Zurich is a city in which about 208 thousand people are involved in the financial sector. This figure is not surprising, since finance is practically the main profitable sector of the economy throughout Switzerland. Every fifth job in the country is connected with financial resources.
It is noteworthy that during the crisis of 2008, there was no breakdown of the banking system in this small European state. Zurich has been able to weather the storms of the global economic storm without any problems, which certainly puts it in the best light against competitors on the world stage.
Japanese capital
Tokyo is the city where the stock exchange was opened in 1878. However, for a hundred years the metropolis was not included in the cohort of international financial centers. There were several reasons for this:
- Japan's financial markets did not depend on market forces, but on government policy, which was always focused on solving problems exclusively for the national economy.
- During the 1950s and 60s, Japan actively borrowed foreign capital.
- Foreign financial institutions did not seek to expand their operations in this market due to the tough governmentregulation.
The so-called "oil shock" of 1974 stimulated the Japanese government to increase aggregate spending to bring the country's economy out of crisis. A series of steps taken by the country's leadership led to the opening of doors in Japan for foreign banks and firms trading in securities. This, in turn, led to the introduction of a computerized transaction system in 1983, offshore banking markets were also created, and fixed-term financial agreements began in 1987.
As a result, this economic miracle led to the fact that today Tokyo is the world's most competitive financial center.
Leader of economic freedom
Hong Kong, like other emerging global financial centers, is a city of unique opportunities. The media do not often pay attention to it, but if they do, it is only in a positive way, calling it only the pearl of the East, the city of the future, the city of legend, etc.
Hong Kong has been a leader in economic freedom for 18 consecutive years. At the same time, GDP per person is $36,796. In addition, the center is also a leader in the number of billionaires - 40 people.
Hong Kong provides banks and various investors with the most optimal development conditions, which is made possible thanks to:
- current legislation protecting intellectual property, goods and products from piracyfakes;
- minor restrictions on financial and banking activities;
- government-provided guarantees;
- stability of own currency;
- slight inflation;
- have our own international arbitration;
- proximity to Asian, emerging markets and markets;
- presence of highly skilled workers who speak English.
Asian Titan
Singapore in the period from 1968 to 1985 did not have any significant competitors in its region, which greatly contributed to its development. Today, the largest world financial centers of the planet are simply unthinkable without this state.
Singapore is a country with high technology and a strong economy. Transnational corporations play an important role in the development of the financial center. Singapore also has one of the highest gross national products in the entire world.
The country is attractive to investors due to extremely low tax rates. There are only five taxes in the state, including income tax and wage tax.
Of imported goods, only four are subject to taxation at the time of importation: any alcoholic beverage, tobacco products, cars, petroleum products.
US Capital Market Center
New York is the second largest financial center in the world. The main period of its formation fell on 1914-1945. The average daily indicator of the city's foreign exchange marketis about $200 billion.
The New York Capital Market has the following features:
- All the largest investment institutions on the planet operate here: Salomon Brothers, Merrill Linch, Goldmen Sacns, Shearson Lehman, First Boston, Morgan Stanley, which guarantee the placement of various securities in the primary market.
- Stock trading is more important in the secondary market due to their colossal volume.
- Developing countries have rather limited access to the New York capital market, due to rather stringent requirements of the Securities Commission.
Unconditional dominant
All the world's major financial centers lag behind their leader - London. The British capital won the fight for the first position largely thanks to its liberal legislation.
Nearly 80% of investment banking transactions flow directly or indirectly through London, which is why the city is rightfully ranked first among all financial centers in the world.
The City of London owns 70% of the secondary market for all bonds and almost 50% of the derivatives market. In addition, the main city of Foggy Albion actively trades in foreign currency. This segment of the market is growing every year by 30%. About 80% of all European hedge funds are managed from London.
In general, the world's financial centers (London is no exception) have well-informed international investment bankers, a developed network of communications, a fairly liberal regulatory structure.
Russian pillar
Today, Moscow is a global financial center, which is quite low in the world ranking (75th place). It’s all to blame for a whole range of problems that prevent Belokamennaya from rising higher, among which:
- Lack of full-fledged courts. The thing is that Russian judges are not fully aware of financial schemes and trading on the stock exchange, and also have no right to hold court hearings on these issues. This is because the financial transactions of the exchange do not appear in the laws of the Russian Federation at all.
- Colossal taxes. Nowadays, in New York, London, Singapore, there are special income tax rates of 16.5%. Russia can only dream of such a thing.
- Lack of a financial instrument to protect investors from a sharp drop in the value of shares in the thirty-day period after their purchase.
- A lot of fraud and the lack of the required number of qualified financiers.
Nevertheless, the country's leadership has plans to bring Moscow to the level of a really powerful financial center by 2020, which will be quite competitive in its environment.
