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A dominant global financial center has international connectedness, cultural and educational diversity, and expertise across the full range of financial products and services. We walk you through the top three, New York, London, and Singapore, as ranked in the Global Financial Centres Index (GFCI). All were recognized for their robust financial institutions, trusted regulatory channels, skilled workforce, educational and research resources, and first-rate infrastructure.
Key Takeaways
- New York is on top with the two largest stock exchanges in the world: the New York Stock Exchange and the Nasdaq.
- London is second, bloodied but unbowed after the lingering effects of Brexit.
- Singapore moved ahead of Shanghai in the latest index but below London in the index.
- A slight change in the weight given certain criteria or minor point change would lead to many cities swapping places in the index. As with other such rankings, it’s best to take them as helpful in considering the world’s financial centers but not as set in stone.
The index, updated every six months by the Z/Yen Group, a London-based commercial think tank, draws on data from the United Nation’s ICT Development Index, the World Economic Forum’s Networked Readiness Index, and the World Bank’s ratings on government effectiveness, among 151 other metrics and survey data.
1. New York
From its origins as the U.S.’s first federal capital to its present status as a financial linchpin, New York has been the home to the country’s major financial markets since the NYSE opened in 1792. Today, Wall Street in Lower Manhattan is the world’s most important financial district, with the street a synonym for global finance. Midtown Manhattan, meanwhile, houses the headquarters of many of the most significant investment banks, hedge funds, and law firms.
Listed first in the Global Financial Centres Index and the world’s wealthiest city, New York’s financial dominance is symbolized by Wall Street, the enduring global symbol for finance. Home to the New York Stock Exchange (NYSE) and Nasdaq, the first and second largest stock exchanges by market capitalization (about 25.2 and 20.6 trillion as of late 2023, respectively), and headquarters for financial giants like JPMorgan Chase & Co. and Citigroup Inc., the city has an unrivaled concentration of financial power and influence. It’s also the site of many of the most powerful investment banks, such as Goldman Sachs and Morgan Stanley, and the city’s a leading player in asset management, foreign exchange, financial technology, and private equity.
2. London
London and New York have previously swapped first and second place on the list, though that appears less likely since Brexit. London is home to the Bank of England, one of the world’s oldest and most prestigious central banks. The London Stock Exchange is among the world’s top five stock exchanges (it lost and regained its title as being the largest in Europe), the city has one of the world’s largest banking sectors, and it’s the site of the London Bullion Market, the world’s largest for gold and silver bullion trading. In the GFCI financial competitiveness categories, London ranked second across the board for its business environment, human capital, infrastructure, financial sector development, and reputation.
Brexit is expected to continue to substantially impact the U.K. and London’s traditional places as one of the most important financial centers. The move out of the EU meant London firms lost so-called “passporting rights,” the ability to operate freely in the EU without needing separate licenses. Some financial institutions have relocated all or parts of their operations from London to other EU financial centers like Frankfurt, Paris, and Dublin to keep their direct access to the EU market. London’s financial sector has also traditionally benefited from its ability to attract talent from across Europe. Despite more bureaucratic hurdles and other changes post-Brexit, the lure of London and its cultural and global scene still makes the city a sure bet in continuing to recruit from among the brightest and best workers from the EU and beyond.
The U.S. had the most financial centers in the index, with New York, San Francisco, Los Angeles, Washington D.C., and Chicago in the top 10.
3. Singapore
Despite its geographic size and lack of available resources, Singapore, a small island nation in Southeast Asia, is a major financial center. Singapore’s financial markets are some of the most important for trading in chemicals, refined petroleum, and electronics.
A stable regulatory and legal framework supports Singapore’s capital markets. As a tax haven, Singapore brings in considerable capital in the insurance, wealth management, and private banking industries, especially since it doesn’t have a tax on capital gains. The city-state’s professionals are highly educated, specialized, and versatile, especially in tech. Workers with Chinese, Malay, and Indian origins are proficient in English and several regional languages, a major point in its favor when seeking to access Asia’s markets.
Why Does the US Have So Many Cities Ranked Highly as Global Financial Centers?
The U.S. takes up half the top-10-ranked financial centers in the GFCI because of its large, diverse economy, and the momentous role it plays in global financial markets. For example, the dollar is the world’s leading reserve currency. The U.S. also has an advanced infrastructure, a robust legal and regulatory framework, and financial and technological companies among the world’s best in innovation. Cities like New York, Chicago, and San Francisco each have unique strengths: New York with its stock exchanges and banking institutions, Chicago with its futures and commodities markets, and San Francisco with its proximity to Silicon Valley and power in fintech.
What Cities Were Historically Important Financial Centers?
Historically, cities like Venice and Amsterdam were the preeminent financial centers. During the Renaissance, Venice was pivotal in the development of the European model of international finance and trade. Amsterdam, in the 17th century, was instrumental in laying the foundations for modern financial systems, including the establishment of the first stock exchange. Their decline was due to diverse factors like political shifts, military conflicts, and the rise of new economic and colonial powers, which shifted the focus to cities like London and New York.
What Are the World’s Major Tax Havens?
Major tax havens include Switzerland, the Cayman Islands, and Luxembourg. These locales offer low tax rates and privacy, attracting high-net-worth individuals and corporations looking to minimize tax liabilities. While they play a role in global finance by holding substantial amounts of foreign assets and capital, they also face criticism and scrutiny for encouraging tax avoidance and lacking transparency, often hiding assets for those involved in illicit trade, terrorism, and the sale of illegal narcotics.
The Bottom Line
The dominance of New York, London, and Singapore among the top global financial centers reflects their historical significance, strategic geographical positions, and adaptability to modern financial dynamics. New York has its world-renowned stock exchanges and concentration of major banking institutions. London is rich in financial history and remains a global trading nexus post-Brexit, and Singapore continues its rise as a powerhouse helping to propel Asian finance markets globally.