One of the less dignified features of the era of easy credit and the ensuing boom in financial wizardry was the fight for bragging-rights between London and New York over which was the world’s leading financial centre. A resurgent London gloated for a time, pointing to heavy-handed US regulation, typified by Sarbanes-Oxley. New York professed to be unconcerned and dubbed certain London markets “casinos”, while having a quiet identity crisis. The debate that pitted New York’s reluctance to embrace a regulatory “race to the bottom” against London’s love of “light touch” oversight now seems laughable. Both systems failed, and on multiple counts. It is strange, then, that this week’s Global Financial Centres Index, which showed London leading New York narrowly, was hailed as reassuring. Expressing faith in the cities as places to do business is rather like China continuing to buy US Treasuries faced with a deluge of issuance.
Even though the survey showed a widening gulf between the pair and third-placed Singapore, respondents fear knee-jerk regulatory reaction will threaten the global leaders’ positions.
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