The Changing Landscape of International Finance Centres

The Changing Landscape of International Finance Centres

Sir Mark Boleat

40 years: Executive leadership & banking

London has been a financial centre for centuries. Sir Mark Boleat discusses some of the reasons why London has achieved this status and how Brexit might impact this position.

London has been a financial centre for centuries. Sir Mark Boleat discusses some of the reasons why London has achieved this status and how Brexit might impact this position.

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The Changing Landscape of International Finance Centres

6 mins 54 secs

Overview

London is currently deemed to be an international financial centre (IFC). Their role as an IFC is partly due to their rule of law, political stability, and high-quality education system, and partly due to the decisions of other countries that have made them less appealing to base businesses. Although not the sole reason for London’s IFC status, being a member of the European Union was a key advantage. Brexit will certainly impact London’s position.

Key learning objectives:

  • Explain London’s role as an IFC

  • Outline the features that have positively impacted London’s status as an IFC

  • Explain how Brexit will affect London’s position as an IFC

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Summary

What is London’s role as an IFC?

London has been a financial centre for hundreds of years and its financial services business has been built up over that period for a variety of reasons, some intrinsic to London and the UK; others linked to decisions in other countries, such as the development of the Eurobond market as a result of tax changes in the US.

The European Union has provided a significant boost to London’s status as an IFC - implementation of single market measures meant that business could be done throughout the whole of the European Union from just one regulated and authorised business wherever that was located in the 28 EU countries.

What other features have positively impacted London’s status as an IFC?

  • The rule of law is a particularly important feature of the UK, not only for financial services but for business generally. English law is used to govern contracts that have nothing to do with the UK; many legal disputes are settled in London
  • The UK can also claim political stability, and relative tax and regulatory stability
  • The UK has a high-quality education system
  • London has an appealing lifestyle
  • The English language is also an advantage

How will Brexit affect London’s position as an IFC?

Brexit will have an adverse effect on London’s position as an IFC. When the UK leaves the EU, some activities currently conducted in the other EU member states from London will have to be switched to an EU centre. This applies to mainstream banking and insurance. In recent years, large investment banks, insurance companies and other businesses have established or built up existing entities in EU member states.

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Sir Mark Boleat

Sir Mark Boleat

Sir Mark Boleat has held a wide range of board level appointments in the UK and Jersey. He is currently the Chairman of LINK, Eldon Insurance Services and the Governors of the City of London Academy Highbury Grove. Sir Mark is also Vice Chairman of the Advisory Board of the International Business and Diplomatic Exchange.

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