What makes a city a financial center? Is it the strategic location, the presence of big businesses and modern infrastructure? Actually, all financial centers possess these features and more. To be considered a financial center, a city has to have the following: heavy concentration of financial institutions, a highly developed commercial and communications infrastructure system, must have the ability to generate a great number of domestic and international trading transactions are conducted, and must be currently implementing sound and flexible financial policies.
So where are the world’s top financial centers located? A recent study sponsored by the Qatar Financial Center Authority, examined the top 1,000 financial centers of the world and placed the following cities on top of the list.
10 Seoul, Korea: New Tourist Destination?
The crown of South Korea is also the first city in East Asia to have electricity, a telecommunication grid, and a water system all at once. Its current main industries include electronics, textile production as well as iron and steel production. The city has also been investing heavily into promoting itself as a tourist destination. Famous transnational companies that are based in Seoul include the Citigroup, Deutsche Bank, Bank of America, HSBC, Goldman Sachs, Morgan Stanley, JPMorgan Chase, Barclays, Grupo Santander, UBS, Credit Suisse, UniCredit, ING Bank, State Street and Standard Chartered, among others. The Korea Exchange Bank also has its headquarters in this very cosmopolitan city.x
9 Frankfurt, Germany: Home to one of the Largest Stock Exchanges
A regional hub when it comes to banking, Frankfurt is home to the European Central Bank, the central bank of the Eurozone, whose 17 member nations that make up the European Union have all adopted the euro as their common currency. It is also home to the Deutsche Bundesbank, the central bank of Germany. As of 2010, 63 national and 152 international banks have their official addresses in Frankfurt, including the major German banks Deutsche Bank, Commerzbank, DZ Bank, and KfW. Frankfurt is also home to the Frankfurt Stock Exchange, one of the world's largest stock exchanges by market capitalization, which accounts for over 90% of the turnover in the German market.
8 Geneva, Switzerland: home to the Famous Swiss Watches
When Jews and Protestants were chased away from France in the 16th and 17th centuries, they found a haven in Geneva and took their business there. Now the city is among the richest and most expensive cities in the world. Geneva is also listed among the most livable cities in the world. The City lists private banking and manufacture as among its major industries, along with the production of the famous Swiss watches, which has been going on for centuries. The City’s location and political situation also makes it ideal as a headquarters for many international groups such as the International Committee of the Red Cross.
7 Boston, USA: Key to the U.S. Independence
Boston, Massachusetts used to be known as a center of U.S. history before it became an economic hub, with key events in the war for U.S. independence taking place here. Such historic events include the Boston Tea Party, the Battle of Bunker Hill, and the Boston Siege. Now the city is among the most expensive places to live within the U.S., and is also among the most livable. Its major industries include financing, technological research and development, tourism, medicine, education, commercial fishing, food processing, printing and publishing, real estate, and government. The City’s financial district is home to major banks, investment firms, and insurance firms.
6 Zurich, Switzerland: Low Tax Rates
Although there were already settlers in Switzerland as early as 6,400 years ago, the city only became wealthy and prominent during the middle ages. The Romans later came to name the settlement Turicum, which eventually became “Zurich.” In 1519, the city became the center of the Protestant Reformation in German-speaking Switzerland. Today, one of the main draws of Zurich for transnational companies is its very low tax rates. Furthermore, the city prides itself in a healthy population of forward-thinking individuals; little wonder the country’s research and development industries are headquartered here.
5 Tokyo, Japan: Sophisticated Transport and Communication Systems
Tokyo is one of the cities with the highest living standard in the world, not bad for a city that started out as a small fishing village. What is even more amazing is that Tokyo overcame the devastating effects of a strong earthquake in 1923, and bombing of the Allied forces at the end of WWII. Today, aside from being home to some of the world’s largest investment banks and insurance companies, Tokyo is also the hub for the country's electronics, telecommunications, publishing and broadcasting industries. One distinct advantage Tokyo has is its sophisticated communication and transport system, in which any destination is seldom more than an hour’s travel away.
4 Singapore: Busiest Port in the World
Being a small country-state with meager land and resources, Singapore has to deal with the outside world to sustain its economy as well as rely heavily on imported goods. To deal with various transnational corporations, the Singaporeans have made their economy quite diversified, and today, it specializes in many fields such as electronics, petroleum refining, chemicals, mechanical engineering, and biomedical sciences. Its location in Southeast Asia makes it attractive to international businesses, particularly shipping. The Port of Singapore is reputed to be the busiest in the world, with over a billion gross tons of shipment passing there yearly. Add to all these a population with rigid discipline and work ethic and you have a small island that is one of the biggest financial centers in the world.
3 Hong Kong: The Worlds Freest Economy?
From a small fishing village, Hong Kong has grown to become one of the biggest centers of finance in the world, with the greatest concentration of corporate headquarters in the Asia-Pacific region crammed into a small space. Although it’s just across Mainland China, this island has an economy that is widely considered one of the freest in the world by the Index of Economic Freedom, not to mention the low taxes and free trade. Hong Kong has also been named as the easiest place in which to raise capital. The Hong Kong Stock Exchange is the 7th largest in the world, little wonder its gross domestic product has grown 87 times since 1961.
2 New York, USA: Home of Wall Street
New York is still the foremost financial center in the U.S. Its largest industries include finance and services, publishing, real estate, media, entertainment and telecommunications, manufacturing, and trade. New York hosts many Fortune 500 and 1000 companies, including eight of the world's top 10 securities firms, more than 20 of the country's top law firms, and over 200 banks representing every major country. The city is also home to the famous Wall Street and the New York Stock Exchange, the largest stock exchange market in the world by dollar volume. New York also boasts of a diverse workforce, as it is a melting pot of various cultures from around the world.
1 London, UK: World's Most Visited City
From its humble beginning as a Roman settlement, London has survived plague, fire, and the blitz of WWII to become the biggest financial center in the world. It has one of the largest metropolitan area GDPs in the world, and is home to many transnational financial, insurance, and banking institutions. London has many major industries, including finance, technology, private healthcare industry, insurance, electronics, media, digital, pharmaceuticals, manufacturing, construction, tourism, real estate, and even fashion. Despite jokes about the weather being bad, it has been judged as one of the best places in which to do business and is also considered the world's most-visited city based on international arrivals. As a result, London has one of the world’s most diverse populations.