As the world’s leading financial centres continue to suffer from the consequences of the financial crisis, and the economies of many emerging markets show impressive growth, it is only natural to wonder if the appeal of New York and London is fading.
Professionals in the financial sector are certainly worried that heavier regulation coming out of the US and Europe will end up driving business away from their leading financial centres. The Dodd-Frank Act and Basel III have generated copious volumes of financial markets and banking rules, and have attracted much criticism from firms who fear their businesses, and the financial sector’s contribution to the economy, will suffer. Others, such as the International Monetary Fund, are calling for even tougher rules, particularly on banks, to strengthen balance sheets and contain systemic risk – all in the hope to avoid the damage that a weak financial sector can do to countries’ public finances if governments are called to bail them out.
