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Friday, 14th August 2020
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The GFCI ratings - by its author Back  
The GFCI Index, developed by Prof Michael Mainelli is becoming the benchmark of international financial centres excellence. He spoke about it, and rising centres.
The Global Financial Centres Index (GFCI) provides ratings for financial centres calculated by a ‘factor assessment model’ built using two distinct sets of output.

The first is instrumental factors which are drawn from external resources and 18,878 assessments were gathered in the last round of the research.

This information is then contrasted with the second output of financial centre assessments which features 62 instrumental factors selected to reflect 15 competitiveness factors identified in previous research.

Professor Michael Mainelli, executive chairman of Z/Yen, which publishes the research, pointed out that London and New York are ranked first and second and scored well in all five areas of competitiveness. ‘Almost everyone we spoke to, particularly in the areas of professional services, found great strength in having both a London and New York office, in terms of the way teams work together, the ability to shift work around and understand jurisdictional implications of transactions,’ said Mainelli. Hong Kong and Singapore rank third and fourth in the table.

Mainelli also highlighted the benefits of niche financial centres: ‘it’s clear that niches work - they’re a means of gaining market share and holding on to it and it’s interesting to see that Zurich, which has been written off repeatedly for the last 30 years, still retains a healthy position in the table.’

He said that Dubai, Mumbai and Shanghai were key contenders among emerging centres.

Sample instrumental factors affecting the decision on choosing financial centres, include people factors, business environment factor, market access and infrastructure. Another contributing factor, said Mainelli, is general perception ‘this is the point where the whole is greater than the sum of its parts,’ he said. ‘Tourism plays a great role in this because people tend to locate in places they’ve visited offering good regulatory and tax regimes.’

As regards sensitivity and variance of financial centres, the research highlights four basic categories: leaders, evolving, minor and volatile. ‘Some financial centres included in the evolving category include places like Chicago, Tokyo and Dubai and we’re looking at how many instrumental factors would need to move to make centres rise or fall,’ said Mainelli.

Referring to Dublin’s 13th placed ranking, the research indicates that the biggest issue is the business environment: ‘this factor has really pushed Dublin’s success it will be sensible policies that’s going to keep it there,’ he said. ‘Dublin features strongly in asset management, banking and insurance, so it is amazingly well placed.’

He was optimistic about the future of existing centres, although he cautioned that ‘own goals’ like the non-doms issue in London and the Northern Rock debacle ‘highlight the need for centres to learn from their mistakes and ensure they are not repeated.’

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