Connecting To Prosper – Mutuality Among Financial Centres

11th May 2023 • News

While financial centres exist in a competitive system that encourages high performance, that system equally exhibits strong elements of cooperation and collaboration that encourage constant improvement and renewed targeting to address society’s deeper needs. In turn, society has a number of mechanisms for resource creation and distribution, ranging from command-and-control to government planning, taxation or direct subsidy. Financial markets believe that they are among the best means by which people funnel investment toward innovation and growth. One example of cooperation and competition between financial centres and other mechanisms might be the pre-1997 Kyoto Protocol debates between cap-and-trade (an open market solution) and taxation or regulation. In that case, the open market solution was the preferred option, though has yet to fully deliver.

 

Michael contends that financial centres have a common enemy – other ways of organising society.  Drawing on 18 years of research from the Global Financial Centres Index and related work, Michael will set out his thoughts on cooperation and competition among financial centres.  Along the way, he will suggest that financial services firms should be both collaborative and competitive, an uneasy tension that is never fully resolved. They must prove to society that markets and financial services are the right, and most efficient way, to solve many problems, including advancing towards attaining many of the SDGs. Financial leaders should also be clear on those areas where markets and finance are not the right answer, and where their business offer can only solve sub-sets of a larger problem. And, when society does allocate a problem to its financial system, financial centre leaders have an obligation to police those markets and to report back on how well they are doing at solving things.

 

Prof Michael Mainelli
IFSP 2023 Conference

 

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