Global Financial Centres Index (GFCI)

The Global Financial Centres Index (GFCI), published biannually by Z/Yen Partners, is a widely recognized ranking of the competitiveness of financial centers around the world. It provides valuable insights for policymakers, financial institutions, and investors seeking to understand the dynamics of global finance and identify attractive locations for business activity.

The GFCI is not simply a measure of financial size or activity. Instead, it considers a complex mix of factors grouped into five broad areas of competitiveness:

• Business Environment: This encompasses factors such as political stability, the rule of law, regulatory quality, and the ease of doing business. A stable and predictable business environment is crucial for attracting investment and fostering financial activity.
• Financial Sector Development: This assesses the strength and depth of the financial sector itself, including the availability of capital, the presence of skilled professionals, and the sophistication of financial markets.
• Infrastructure: Adequate infrastructure, including transportation, communication networks, and technology infrastructure, is essential for supporting financial operations.
• Human Capital: The availability of a skilled workforce, including finance professionals, technology experts, and support staff, is a key determinant of a financial center’s success.
• Reputation and General: This category includes factors such as the city’s reputation, its cultural environment, and its quality of life, which can influence its attractiveness to both businesses and talent.

The GFCI uses a sophisticated model that combines objective data (from reputable sources like the World Bank and the OECD) with subjective assessments from an online questionnaire completed by financial professionals worldwide. This blend of quantitative and qualitative data provides a comprehensive and nuanced view of each financial center’s strengths and weaknesses.

The GFCI ranking is updated twice a year, reflecting the ever-changing landscape of global finance. Changes in the rankings can be driven by a variety of factors, including regulatory reforms, technological advancements, geopolitical events, and shifting economic conditions. The index helps identify which centers are rising in prominence and which are losing ground.

The index serves as a benchmark for financial centers striving to improve their competitiveness. By identifying their strengths and weaknesses relative to other leading centers, policymakers can focus their efforts on areas where improvements are needed. Financial institutions can use the GFCI to inform their location decisions, considering factors such as regulatory environment, access to talent, and infrastructure. Investors can use the GFCI to assess the risk and opportunities associated with different financial centers.

While the GFCI is a valuable tool, it is important to note its limitations. The index is based on a specific set of criteria, and other factors may also be relevant to individual businesses or investors. Furthermore, the subjective component of the index means that the rankings can be influenced by perceptions and biases. Nevertheless, the Global Financial Centres Index remains a vital resource for understanding the dynamics of global finance and navigating the complex world of international financial centers.