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Which cities are the best financial centers? Where are the European ones ranked?

2024-03-16 12:16:47Lifestyle SHKRUAR NGA REDAKSIA VOX

Which cities are the best financial centers? Where are the European ones ranked?

In the rapidly evolving landscape of global finance, European cities are in fierce competition to establish themselves as financial powerhouses, an attractive label that can bring substantial investment from business owners and increased attention from policymakers. In a recent ranking by the Global Financial Centers Index (GFCI), seven European cities are included in the top 20 financial centers in the world.

While the US dominates the top end of the list, with New York taking first place, London continues to lead in Europe. It has closed slightly on the Big Apple compared to the previous ranking and is in second place globally, but is only slightly ahead of Singapore and Hong Kong in third and fourth place respectively.

Switzerland's Geneva is the only other European city to join the British capital in the top 10. Increasing its rating by 29 points, Geneva has outperformed its financial rivals over the past year, according to the GFCI, climbing from 23rd in the 10th place. The Swiss city is only five points behind the fifth place, occupied by San Francisco. Analysts cite Switzerland's regulatory environment and low levels of corruption as major advantages for its cities' financial strength.

Frankfurt, home of the European Central Bank, has snatched the third European top spot from Paris in the latest report. Known as the Euro City, Frankfurt is also home to Germany's central bank: the Bundesbank. The German financial center rose from 17th to 14th globally in the GFCI, while Paris fell from 14th to 15th. However, only one rating point separates them. Frankfurt is also among the 15 cities that survey participants expect to gain in importance. European cities finishing in the top 20 are Luxembourg (16), Zurich (18) and Amsterdam (19).

Germany is the strongest European nation when it comes to looking at rankings by country. Despite none of them making the top 10, Germany has five cities in the world's top 50 list – the most of any European country. Apart from Frankfurt, Berlin rose from 26th to 23rd, while Munich rose from 18th to 26th. Stuttgart moved up slightly from 47th to 46th, while Hamburg fell from 43rd to 49th. Switzerland is the European nation with the next most cities in the top 50, with Lugano coming in at number 47. The UK has two with Edinburgh in 34th place.

Other European cities that are included in the top 50 are Ireland's Dublin (25th), Sweden's Stockholm (40th), Norway's Oslo (42nd), Italy's Milan (45th), Spain's Madrid (48th) and Finland's Helsinki (50th). Their individual results clustered closely together, suggesting possible changes in the next GFCI report.

Also worth noting are the three British Crown Dependencies, which each occupy a place in the top 60. Jersey, Guernsey and the Isle of Man are ranked 52nd, 58th and 59th respectively. They are not part of the United Kingdom, but are self-governing possessions of the British Crown. The GFCI categorizes Europe into two groups: Western Europe, and Eastern Europe and Central Asia, showing a clear division between east and west.

Up to the 60th place in the list, all the best financial centers of Europe are in the group of Western Europe. Kazakhstan's Astana ranks 60th, holding the top spot in the Eastern Europe and Central Asia grouping. Prague is next in 79th place and then Tallinn in 87th place. Away from Europe, the US scored highly, with five financial centers in the top 10, reflecting the strength of the US economy. Major Chinese hubs also appeared in the top 20.

What makes a good financial center?

According to GFCI 34, a city's reputation and business environment have a significant correlation with its financial competitiveness. The report found that the Corruption Perceptions Index and the World Economic Freedom Index demonstrate the connection: A city's rating as a financial center increases in line with increasing economic freedom and decreasing perceptions of corruption.

The branding of a city is also an important factor affecting the competitiveness of financial centers. Analysts say that a positive city reputation, built through factors such as safety, stability, cultural offerings and quality of life, can attract businesses, professionals and investors.


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