A dominant global financial center has international connectedness, diversity, and expertise in a variety of financial products and services. The Z/Yen Group publishes the Global Financial Centers Index (GFCI) every six months and provides a ranking of the world’s top financial centers according to their international competitiveness. Below is a summary of the top three as published in the Group’s September 2018 edition.
3. Hong Kong
GFCI Rank: 3
GFCI Rating: 783
Coming in third place overall, Hong Kong offers a variety of financial products and services with vastly integrated institutions and markets. Its financial markets are highly liquid and operate within a set of effective and transparent regulatory standards. Hong Kong’s government works to maintain a stable and business-friendly environment, with no barriers to foreign business and no restrictions on capital flows.
While ranked number three globally, Hong Kong took first place among the Asia/Pacific region coming ahead of both Singapore and Tokyo. According to the report, Hong Kong had a first-place ranking in the competitive areas of human capital and infrastructure. The city was ranked third for the competitive areas of business environment and financial sector development. It was also ranked seventh for centers likely to be more significant in the next two to three years.
GFCI Rank: 2
GFCI Rating: 786
London was in second place after New York, although the two often exchange first place. London is home to the Bank of England (BoE), one of the most prestigious and oldest central banks in the world. The London Stock Exchange (LSE) is among the world’s top five stock exchanges, and the city has one of the world’s largest banking sectors.
In the GFCI financial competitiveness categories, London ranked first for business environment, second in the competitive areas of human capital, financial sector development and reputation, and it ranked third for infrastructure. Brexit is having a substantial impact on the business environment globally, and particularly on the United Kingdom's position as a financial center. London's could lose much of its financial institutional density depending on the outcome of Brexit. Many firms are choosing to relocate due to future uncertainty.
1. New York
GFCI Rank: 1
GFCI Rating: 788
New York, with its renowned Wall Street whose reputation is synonymous with finance, took first place in the GFCI rankings. The city is home to two of the largest stock exchanges—the New York Stock Exchange (NYSE) and the NASDAQ—in the world based on market capitalization, and some of the world’s largest banks have their headquarters there—JP Morgan Chase & Co. and Citigroup Inc. (To read more, see: Why Wall Street Is A Key Player In The World’s Economy.)
New York ranked first for the competitive areas of financial sector development and reputation. The city ranked second for business environment and infrastructure and third for human capital.
The Bottom Line
New York overtook London and assumed first place in the index. Because of the ongoing uncertainties caused by Brexit, New York is likely to retain its number one spot for the next few years. (To read more, see: Brexit Uncertainties Dominate EU Summit.)