Wholesale Financial Markets:
What are they and why are they useful?
Key Messages

Wholesale Financial Markets connect investors and issuers, thereby providing
high value financial services to medium and large businesses and governments.

Wholesale Financial Markets enable companies looking to invest and expand to
raise finance - thereby helping drive the economy and job creation.

Wholesale Financial Markets help companies reduce the risks associated with
transacting business in different currencies, with volatile interest rates, and with
variable commodity prices.

Wholesale Banks help companies manage their capital efficiently - to ensure
they have sufficient cash to meet their operating costs, while maximizing their
returns from excess cash.

Without Wholesale Financial Markets, important services such as pensions and
mortgages would be more expensive and less freely available to individuals.
What are Wholesale Financial Markets?
Where the retail financial markets provide services (such as
transactional banking, savings and credit facilities) to
individuals and small businesses, the wholesale financial
markets support larger bodies - corporates, public sector
organisations, governments, investors (e.g. pension funds)
and financial institutions. Through these markets companies
and governments can raise finance or acquire products that
help them reduce the risk of doing business. They also
provide an opportunity for individuals to invest in a range of
products such as debt and equity, commodities and cash,
through institutional investors. Wholesale Markets also
underpin retail financial services, helping banks borrow for
short periods while lending to customers for longer periods,
for example through mortgages. This is often called “maturity
transformation”.
Wholesale Market Participants
Banks
Investors
Brokers
1
Whilst there is no universally held description of a Wholesale
Financial Market, they are most commonly defined by what
they do and who they serve. Wholesale Financial Markets
support businesses in a number of ways, but the principal of
these are:
6,000
Providing Funding: If a company needs money to invest
and grow its business, it will often need more than it has
readily to hand in the form of retained profits. Such a
company needs to find another way to fund its investment.
Wholesale Markets can help these companies access
finance in a number of ways.
2,000
Firstly, banks help through corporate lending, where they
use the money deposited with them by savers to invest in or
lend to companies seeking finance. This enables savers to
earn a return on their deposits, while at the same time
enable organisations of all sizes to access funding. In 2011
over €51bn was lent to non-financial corporations, leading to
a total of €4.7tn loans outstanding at the end of December
2011 (see figure 1).
Euro Area Loans outstanding to Non–Financial
Corporations at the year end (€bn)
5,000
4,000
3,000
1,000
-
Source: ECB
Figure 1
Value and Number of
Initial Public Offerings
in the UK
250
350
Value of IPOs $bn
(lhs)
Number of IPOs
(rhs)
200
300
250
150
200
150
100
100
50
50
0
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Secondly, they can help organisations and governments
raise money directly through issuing debt (bonds) or equity in
the capital markets. With an equity issue a company raises
money from investors in return for a share in the business.
With bond issuance a company raises money from investors,
agreeing to pay a specified return until the sum is repaid. In
both cases the Wholesale Bank will underwrite the issue that is they will agree to take the responsibility and risk for
selling a specific allotment of debt or equity. The Wholesale
Bank is better placed to do this, rather than an individual
firm, as it has the capital raising ability and capital strength
that a typical company does not. Over the last decade
companies have raised almost $340bn through initial public
offerings (IPO) in the UK (see figure 2).
Source: Bloomberg
1000
900
The Wholesale markets
help fill the customer
funding gap
800
Customer f unding gap
£bn (lef t-hand scale)
30
Customer f unding gap
as a per cent of loans
(right-hand scale)
25
700
20
600
500
15
400
10
300
200
5
100
0
0
2005
2006
2007
2008
2009
2010
H1 2011
Source: Bank of England
30.0
25.0
Assets under Mgt, 2008 $tn
Managing Risk: Companies - particularly international ones
which transact business in multiple geographies and
currencies - are exposed to a number of risks arising from,
for example, fluctuations in exchange rates or in the costs of
the commodities or raw materials which underpin their
business. To be able to plan effectively, companies need to
insulate themselves against the risk of movements in
commodity prices or interest rates undermining their
business - they need to „hedge‟ this risk. Wholesale Banks
help companies by structuring hedging products such as
Figure 2
Figure 3
The majority of global wealth is
managed by insurance, mutual
and pension funds.
20.0
15.0
24.0
10.0
18.7
5.0
0.0
19.0
8.1
0.9
1.5
Source: TheCityUK
2.5
3.9
Figure 4
2
derivatives to mitigate the risk
volatility can pose to businesses.
Wholesale Financial Markets & Customers
Inter-Bank
Market
Short Term
The Money Markets
Capital Markets
Long Term
Managing Capital: It is essential
that companies manage their
working capital as efficiently as
Retail Financial
Markets &
possible. They must understand
1. Access to
Capital Market
Customers
Finance
how much cash they need to have
2.
Provision of Risk
on hand to meet their various
Management
Banks
Products
operating costs, while at the same
3. Provision of
Saving
investment
Deposits
time maximizing the return of any
products
excess cash. As part of cash and
Retail
Customers
liquidity management, Wholesale
Lending
Banks help companies with shortterm investing and borrowing
through the money markets or in
managed by pension funds worldwide
highly liquid products such as government
(see figure 4).
bonds (i.e. treasury bills or gilts).
Funding Asset Purchases: Wholesale
Financial Markets also incorporate the
interbank market - in which banks borrow
from each other to support “maturity
transformation” - borrowing for a short
period of time to enable long term lending
to retail customers, e.g. for mortgages.
Without this banks would need to match
their lending to their customer deposits,
severely limiting the finance available for
mortgages and other retail loans. The
Wholesale Markets help fill the customer
funding gap, which was £274bn in June
2011 (see figure 3).
Investing Pensions: The average UK
pensioner draws less than half their income
from the state pension and other benefits.
This means private savings are essential to
funding people in their retirement. Private
pensions are a core part of these private
savings. Institutional investors pool and
invest individuals‟ savings in the Wholesale
Markets in a range of instruments of various
rates of risk and return depending on an
individual‟s circumstance, helping them
save for retirement. In 2008, $24tn was
Financial
Institutions
Corporations
Investors
Government
Saving
Deposits
Corporate
Customers
Lending
Case Study
Benefit to individuals - Insurance: Risk is
inescapable for people, businesses and
public bodies, whether it be fire, floods,
crime, accidents or other costly threats.
Insurance companies paid out £23.4bn in
2010 on claims for general business such
as vehicle, property and accident cover,
while £151bn was paid out on long-term life
assurance and pensions policies.
The scale of protection can be seen in the
amounts paid out daily: £22m in private
motor claims and almost £10m to
householders for property damage or the
loss of possessions. There were 3.7m
private motor claims and 2.1m household
claims in 2010.
Without the ability to pool and invest
premium income, and hedge risks in the
Wholesale Markets, insurers would not be
able to offer the same levels of coverage to
businesses and individuals.
3
Conclusion
Authors
Wholesale Financial Markets serve corporates, public sector
organisations, governments, investors and financial
institutions in two broad ways: raising finance and managing
risk. The interconnected nature of financial services means
this enables activities that directly benefit individuals, for
example, access to insurance and mortgages. If the
Wholesale Financial Markets were limited, there would be
fewer tools to manage risk, and fewer options available to
raise finance.
The Wholesale Financial
Markets Papers have
been commissioned by the
IRSG & CBI, and compiled
by Accenture Research.
About IRSG
The International Regulatory Strategy Group (IRSG) is a
practitioner-led body comprising leading UK-based figures
from the financial and professional services industry. It aims
to contribute to the shaping of the international regulatory
regime at global, regional and national levels, so that it
promotes open, competitive and fair capital markets globally
and supports sustainable economic growth.
Other papers in this
series:
1. Wholesale Financial
Markets: Why are they
valuable to Europe?
2. Wholesale Financial
Markets: Why does
Europe need
International Financial
Centres?
Its role includes identifying strategic level issues where a
cross-sectoral position can add value to existing industry
views. It is an advisory body both to the City of London
Corporation, and to TheCityUK which is an independent
practitioner-led body set up to co-ordinate the promotion of
the UK-based financial and professional services industry.
About CBI
The CBI is the UK's leading business organisation, speaking
for some 240,000 businesses that together employ around a
third of the private sector workforce.
4
Wholesale Financial Markets:
Why are they valuable to Europe?
Key Messages
 Wholesale Financial Markets provide benefits to Europe through the products
they provide to business, as well as their contribution to national accounts.
 European Wholesale Financial Markets helped 340 new companies raise $38bn
through equity issuance in 2011.
 Wholesale Financial Markets helped EU15 corporates raise over $82bn
internationally in 2010. Corporates in the EU15 currently have over $1.4tn in
international debt outstanding.
 Wholesale Financial Markets are essential for companies looking to mitigate
risks associated with fluctuating commodity prices, exchange rates and interest
rates. The notional amount of Euro interest rate swaps outstanding at the end of
2010 was $10.6tn for non-financial institutions.
 In 2010, the contribution of the wholesale financial sector to EU Gross Value
Added was €246bn – and exports were €60bn (€5bn more than USA).
Why are wholesale financial markets valuable
to Europe?
Wholesale Financial Markets are a vital component in
achieving the Europe 2020 Growth Strategy, of a smart,
sustainable and inclusive economy. A wide array of
companies rely on the Wholesale Markets to help them raise
the money they need to invest and grow and to help them
manage business risks and achieve efficiency in the way they
manage their capital. The Europe 2020 Strategy calls
specifically for “innovative instruments to finance the
necessary investment” for growth. Not only do Wholesale
Financial Markets support the European economy, but the
financial services sector they underpin makes a substantial
contribution to European output in its own right, and is a
major employer.
From the Europe 2020 Strategy:
“Tools for Growth”
1. Deepening the single market
- Wholesale markets are perhaps
the most interconnected
network
2. Investing in Growth
- Financial Services provide
innovative instruments for
investment
3. External Policy Instruments
- Wholesale markets enable
macroeconomic policy
coordination
1
8.0%
Wholesale Financial Services as % GDP
for selected EU countries
7.4%
Enabling Business (Indirect value):
7.0%
6.0%
Wholesale Financial Markets make a significant direct
contribution to EU job creation and the economy by driving
growth in all sectors of the wider economy. The different
functions of Wholesale Financial Markets help the EU wider
economy in a number of ways through financing businesses
and helping them purchase tools to manage risk, as
illustrated by the following examples. With a competitive
Wholesale Financial Market, these activities enable the wider
economy to be competitive itself on the international stage.
4.9%
5.0%
4.0%
3.0%
2.7%
2.0%
2.3%
2.1%
2.0%
2.0%
1.4%
1.3%
1.0%
0.0%
Source: London Economics / City of London Corporation
Trade in Wholesale Financial Services (€bn)
Financing: Invest Securities, a financial services group
offering services to small and mid-sized companies, helped
to raise €12m in the IPO of Deinove, a company specialising
in biofuel technology, on the Paris Stock Exchange (April
2010). Together with €2.35m from Truffle Capital, a French
based venture capital firm, the company obtained enough
financial resources to cover the needs of its R&D programme
for three years, allowing the company‟s 20 employees to
continue the development and commercial exploitation of
innovative biofuel production. European wholesale markets
helped 340 new companies raise $38bn through equity
issuance in 2011.1
600
Other services
500
Finanical Services
400
300
432
386
200
100
66
46
38
29
0
Eu27 Total
Eu27 Total
Service Exports Service Imports
Eu27 Total
Service Net
Imports
Source: London Economics / City of London Corporation
300
700
European Equity Raising
625
$260.9
612
Value of IPOs ($bn)
250
600
Number of IPOs
530
500
200
400
150
324
340
$115.7
253
200
$64.1
147
74
50
112
$31.3
2
$38.0
2010
2011
100
$8.2
$7.0
0
0
2002
2003
2004
2005
2006
2007
2008
2009
Source: Bloomberg
Net issues of international debt
securities by corporates
100
80
60
40
0
-20
-40
Source: BIS
1
$36.1
$22.8
$11.2
20
Managing Input Price Risk with options: A German car
manufacturer is required to purchase significant amounts of
steel. If steel prices are likely to increase rapidly, the
manufacturer may purchase a call option. This would be used
300
269
100
$bn
Managing Output Price Risk with forwards: A wheat
farmer in the south of France is subject to weather risk
impacting on crop prices. During a season of good weather
there may be a large volume of wheat grown across France,
reducing the final price for the product. However, during a
poor season there are low crop yields which drive up the cost
as supply struggles to meet demand. In order to mitigate the
risk from price variation the farmer will enter into a forward
contract which fixes the price at which he will sell his crop.
This will reduce the volatility in revenues leading to a more
stable operating income. This then feeds through to greater
price stability for consumers. The notional amount of
commodity forwards and swaps outstanding at the end of
2010 was $2tn.2
Bloomberg (IPO data)
Bank for International Settlements
2
if steel prices rose over a certain amount. If the price stayed
below that price, then the option would not need to be
exercised. This option would provide some certainty to the
car manufacturer over the cost of steel, but would not limit
the benefit from prices remaining lower. The notional amount
of commodity options outstanding at the end of 2010 was
$911bn.3
Managing Currency Risk with swaps: An Italian wine
company exporting to many countries around the world faces
currency risk. Where currencies other than the Euro are
used, the wine company would be exposed to variations in
the exchange rates between the two countries causing
fluctuations in the income received by the Italian firm. To
mitigate these fluctuations in export income, the wine
company can enter into a „swap‟ which enables it to
exchange alternative currencies back into Euros at a preagreed rate. This would ensure that the firm is obtaining a
consistent Euro price for each case of wine and receive a
more stable income. The notional amount of Euro currency
swaps outstanding at the end of 2010 was $1.22tn for nonfinancial institutions. For Dollar currency swaps this was
$1.51tn and for Sterling swaps, $379bn4.
Managing Interest Rate Risk with swaps: A start-up
brewery has a 5 year variable rate bank loan to help with
start-up costs and working capital. However this variable rate
loan means the company‟s cash flows are unpredictable. In
order to fix interest rates for the brewery to provide more
certainty over future cash flows, they use an interest rate
swap. By paying the counterparty a fixed interest rate, the
counterparty pays them a floating interest rate matching that
of the brewery‟s bank loan. They can then pay this floating
rate back to the bank, and still have the certainty of not being
hit by sudden increases in interest rates. Interest rate
derivatives are the principal instrument used for risk
management, accounting for 78% of global notional value of
all over-the-counter derivatives. The notional amount of Euro
interest rate swaps outstanding at the end of 2010 was
$10.6tn for non-financial institutions. For US Dollar swaps
this was $9.7tn and for Sterling swaps it was $3.4tn5.
Equity issuance:
“The sale of new equity or
stock by a firm to investors to
raise money, typically to invest
in and grow business.”
Futures and Forwards:
“The buyer of the future or
forward contract agrees to buy
a product (e.g., a commodity
or currency) at a fixed price at
a specified period in the
future.”
Options:
“A call option gives the buyer
the right to buy a specified
asset at a fixed price any time
before expiration, and a put
option gives the buyer the
right to sell a specified asset
at a fixed price before
expiration.”
Interest Rate Swap:
“Provides the ability to convert
variable interest rate
payments on loan to fixed
payments.”
Currency Swap:
“One participant offers to swap
a set of cash flows for the
other’s set of cash flows of
equivalent market value.”
3
Bank for International Settlements
Bank for International Settlements
5
Bank for International Settlements
4
3
Direct value to Europe:
Gross Value Added (GVA): The direct
contribution of the financial services sector
is measured in the national accounts by
value added. Although official industry
statistics do not separately distinguish
wholesale and retail, estimates from 2010
suggest that wholesale financial services
across the EU27 contribute €246bn GVA.
This accounted for almost one third of the
global contribution from wholesale financial
services, and is a rise from €135bn in 2001.
This gives an average year on year growth
rate of 7%. This value-added is shared
across Europe, with the largest centres
being the UK (37%), Germany (16%),
Netherlands (11%), Italy (8%) and France
(8%)6.
The wholesale market is also essential to
the broader financial services sector. For
example, the ability of banks to engage in
maturity transformation through the
wholesale markets, by accessing the shortterm interbank and money markets and
extending longer-term loans to customers,
underpins the retail banking sector. As
measured, the EU financial sector
contributes around 6% of total EU gross
value added. The Euro area accounts for
over 70% of this, the UK around 20%.
A major European export: The EU
wholesale financial services sector is also
an important contributor to the EU‟s current
account balance. The most recent data
shows that in 2007 total exports of
wholesale financial services by the EU to
the rest of the world stood at €66.4bn (13%
of total EU services exports). This
represented a substantial current account
balance surplus in financial services of
6
€37.7bn, almost 45% of the total surplus in
services.
Conclusion
Whilst the EU wholesale financial services
generate significant employment and are a
major EU net exporter in their own right,
their most important role is that of
supporting the wider EU business sector.
Whether helping small start-ups through the
provision of venture capital, or raising
capital through IPOs, the wholesale
financial markets help Europe‟s businesses
fund growth and investment. Through future
or forward contracts, and through swaps
and options, the wholesale financial
markets help give businesses greater
predictability of costs and revenue flows.
The wholesale financial markets can
provide the degree of certainty which
underpins business cases, aids
competitiveness, and is essential for the
success of organisations in the wider
economy.
About IRSG
The International Regulatory Strategy
Group (IRSG) is a practitioner-led body
comprising leading UK-based figures from
the financial and professional services
industry. It aims to contribute to the shaping
of the international regulatory regime at
global, regional and national levels, so that
it promotes open, competitive and fair
capital markets globally and supports
sustainable economic growth.
Its role includes identifying strategic level
issues where a cross-sectoral position can
add value to existing industry views. It is an
advisory body both to the City of London
Corporation, and to TheCityUK which is an
independent practitioner-led body set up to
London Economics 2010 figures
4
co-ordinate the promotion of the UK-based
financial and professional services industry.
Authors
The Wholesale Financial Markets Papers
have been commissioned by the IRSG &
CBI, and compiled by Accenture Research.
Other papers in this series:
About CBI
The CBI is the UK's leading business
organisation, speaking for some 240,000
businesses that together employ around a
third of the private sector workforce.
1. Wholesale Financial Markets: What are
they and why are they useful?
2. Wholesale Financial Markets: Why does
Europe need International Financial
Centres?
5
Wholesale Financial Markets:
Why does Europe need International Financial
Centres?
Key Messages

International Financial Centres are hubs where cross border financial
business can be conducted easily and efficiently.

An International Financial Centre plays a major role in attracting new business
to cities and countries.

International Financial Centres benefit the European economy directly through
tax contributions, providing jobs, and investment in local businesses.

The whole country, and not just the city in question, benefits from having an
International Financial Centre, as support services are often located
nationwide.

Specialisation has enabled multiple European financial centres to prosper;
they are highly interdependent, with London being the largest and most
interconnected.
What is an International Financial Centre?
An IFC is a centre (often based around a city) from which
cross border financial business can be conducted easily,
efficiently, and profitably within a strong regulatory
environment. IFCs may be nationally focused (catering
mainly to their local economies), regional, or global,
providing a diverse range of financial services to clients from
around the world. They need deep and liquid capital markets,
leading IT and payments infrastructure, and access to
talented, highly educated individuals. IFCs are also not just
an area where financial firms congregate: a successful
financial centre is a hub of high value business services such
as legal services and accountancy. There are a number of
significant advantages to hosting an IFC, and in an
increasingly global world it is vital for Europe to host a
leading one.
1
Employment in Wholesale Financial Services
Benefits of an International Financial
Centre:
London
332.000
Providing jobs: The wholesale financial sector employs
around 1.4 million people across Europe, although this
underestimates the importance of the sector in direct job
creation. The sector’s key role in broader financial services
means it is critical in supporting a major EU industry with 6.5
million people working in the broader sector across the
EU27.
Paris
Frankfurt
Amsterdam
580.000
Luxumbourg
Dublin
Rest of Europe
270.000
20.000
48.000
34.000
76.000
Source: London Economics
Employment in financial services is particularly significant in
major cities in the EU where the majority of wholesale
financial market activity takes place. It employs 352,000
people in London, 270,000 in Paris, 76,000 in Frankfurt,
54,000 in Amsterdam, 48,000 in Luxembourg and 20,000 in
Dublin (figure 1).
Figure 1
Investments by stage focus – evolution
(industry statistics - % of number of companies
financed)
100%
80%
60%
40%
However IFCs are not just a cluster of financial service firms
- they are a hub of high value business services, including
legal and accounting services which facilitate cross border
financial transactions. In London alone an additional 240,000
are employed in associated professional services such as
accountancy, legal services and management consultancy.
Notably, IFCs create high value jobs not just in their host city
but across the country. Firms located in London have a large
support infrastructure based elsewhere, including Glasgow
(Morgan Stanley), Belfast (Citigroup), and Birmingham
(Deutsche Bank), as well as overseas (Barclays in Czech
Republic). There are similar national and Europe wide
benefits from firms based in Paris and Frankfurt.
Raising tax: Thriving International Financial Centres also
make a considerable tax contribution. The UK financial
services sector contributed £63bn in tax in 2010-11, 12% of
total tax receipts. Approximately 40% of this is estimated to
have derived from wholesale financial services attracted by
the IFC. This was enough to pay for government spending
on public order and safety, industry, agriculture and
employment.
20%
0%
2006
Buyout
Growth capital
2007
2008
Replacement capital
Later stage venture
2009
2010
Rescue/Turnaround
Start-up
Seed
Source: EVCA
Figure 2
Source: Europe Economics
Figure 3
European Financial Centres attracting foreign
business – Equity Offering Summary
Supporting local business: Many investment firms based
in Europe will have a local mandate to invest. Investments
into European companies hit £41bn in 2010, of which 97%
came from European private equity firms. The financial
sector plays a key role in helping the European economy
Source: Europe Economics
Figure 4
2
grow, particularly in the small and medium
size sector: 40% of companies receiving
funding from the European Venture Capital
Association members in 2010 were early
stage companies. Without a global
international financial centre creating a hub
for these sorts of investors, there would be
less funding available to the companies of
the future in Europe - which is essential as
Europe looks to finance a private sector
recovery to generate economic growth
(figure 2).
Europe’s International Financial
Centres are:
World leaders: IFCs are competing for
business in a global market, as other
centres (Moscow, Singapore, Malaysia,
Dubai) are investing strongly to gain
advantage. For Europe to maintain the
levels of employment and tax that
accompany successful IFCs, it is essential
that they continue to attract a significant
volume of business. In an increasingly
global world with growth highest in the
emerging economies, this means
successful IFCs need to be able to attract
businesses to engage in financial
transactions in a domicile which is not their
own. Europe has a number of highly
successful International Financial Centres
including Amsterdam, Dublin, Frankfurt,
Luxembourg, Madrid, Milan, Paris and
London. Whilst London is often cited as
offering the greatest breadth of capabilities
(not just in international banking, securities
trading and fund management, but in niche
areas such as carbon markets and maritime
finance), these centres are all leaders in
specific product areas - for example,
Amsterdam specialises in pension
management, and Dublin in fund
administration (figure 3).
European IFCs are innovative too. London
is the leading Western centre for Islamic
finance, with five firms that are fully Sharia
compliant and over 20 banks supplying
Islamic finance, illustrating how the financial
sector can innovate to meet evolving
business requirements and market
demand.
Europe’s International Financial Centres
offer a full suite of services to clients. Their
breadth and depth means they can
successfully compete to attract major
international businesses to Europe rather
than New York or elsewhere. This is
illustrated by the 182 equity offerings by
non-domestic corporates on European
exchanges in 2010, raising over €65bn
(figure 4).
Greater than the sum of their parts:
Often research looks to rank IFCs against
each other, but globalisation has long since
meant that businesses no longer look at
operating purely within national borders.
The financial sector has long understood
this, which is illustrated when looking at
graduate recruitment into London’s financial
sector, 22% of which are from overseas,
including a high proportion from France and
Germany.
This European interconnectedness runs far
deeper than personnel. It is rooted in the
markets themselves, which have become
increasingly interdependent over the past
decade. This is illustrated by the amount of
bank lending outstanding from banks in the
UK to recipients in other European
countries, which rose from $1tn in 2000 to
$2.7tn in September 2011, a 155%
increase. Similarly, of the £3.9tn assets
managed in the UK, one third, is managed
on behalf of overseas clients, with £617bn
managed out of the UK for offshore
domiciled funds such as Luxembourg
based collective investment schemes.
Having the IFC situated in the EU means
that the business is conducted under the
EU’s legal and regulatory framework.
3
This enables EU authorities to influence
the levels of risk and capital taken on.
Conversely, offshoring the markets contains
risk as the firms would not be subject to the
same oversight.
This interconnectedness allied to the
freedom of movement within Europe, and a
strong regulatory environment, enables
Europe’s International Financial Centres to
compete globally and deliver the most
effective and efficient services to clients
both within Europe and around the world.
Conclusion
International Financial Centres are leading
business hubs underpinned by talented
individuals which provide employment and
yield tax. Most importantly, they attract
investment which flows into local
companies. The greater the breadth and
depth of a financial centre, the greater its
ability to attract investment and support the
growth of surrounding economies.
Conversely, if these markets were allowed
(or encouraged) to decline, Europe would
lose jobs, revenue from tax, investment in
business and easy access to facilities for
the wider economy.
As Europe looks to kick start the economic
recovery, it is clear that it needs globally
competitive IFCs to support this
resurgence. Europe has a number of IFCs
which will be at the heart of the effort to
recover - including the leading global
International Financial Centre, London - but
their interdependence is essential to their
success.
industry. It aims to contribute to the shaping
of the international regulatory regime at
global, regional and national levels, so that
it promotes open, competitive and fair
capital markets globally and supports
sustainable economic growth.
Its role includes identifying strategic level
issues where a cross-sectoral position can
add value to existing industry views. It is an
advisory body both to the City of London
Corporation, and to TheCityUK which is an
independent practitioner-led body set up to
co-ordinate the promotion of the UK-based
financial and professional services industry.
About CBI
The CBI is the UK's leading business
organisation, speaking for some 240,000
businesses that together employ around a
third of the private sector workforce.
Authors
The Wholesale Financial Markets Papers
have been commissioned by the IRSG &
CBI, and compiled by Accenture Research.
Other papers in this series:
1. Wholesale Financial Markets: What are
they and why are they useful?
2. Wholesale Financial Markets: Why are
they valuable to Europe?
About IRSG
The International Regulatory Strategy
Group (IRSG) is a practitioner-led body
comprising leading UK-based figures from
the financial and professional services
4