Gibraltar received exciting news last month. The latest Global Financial Centres Index (GFCI), published by the consultancy Z/Yen in London, revealed that “the Rock” had risen further and faster up the ranks than any other center — 17 places, from 70th to 53rd position, since the previous report in September last year.
One can imagine the celebrations in Gibraltar Town, where, now that the British naval base has closed and Spain is being difficult at the border, financial services are crucial for employment. One can also imagine that many in Hamilton, Bermuda, which plummeted almost as far as Gibraltar climbed — 16 places, to 56th — must be crying into their rum punch.
Of course, it is also possible that Gibraltar and Bermuda have chosen to ignore the results, or dispute their significance. Either way, there is no doubting the global obsession with league tables nowadays. One can find a ranking for almost every form of human activity.
Commercial banks are ranked by assets. Investment banks are ranked on a variety of metrics, as are universities — from academic results to their prowess in environmental management, or their appeal to gay students. In the UK, you can find a table showing where it is best to live if you wish to win Britain’s National Lottery. (Your chances are almost twice as good in the northeast as in Northern Ireland.)
When one looks closely, most of these tables are, as former US secretary of state Henry Kissinger famously put it, “content-free.”
For one brief shining moment, the Royal Bank of Scotland was global top dog in rankings of commercial banks, and we know how that story ended. Is this true of the GFCI, or does it contain valuable insights into how the global financial system is evolving?
The press headlines accompanying the release of the latest GFCI focused on the change at the top of the league: New York leapfrogged ahead of London, while Hong Kong and Singapore held on in third and fourth place respectively. Is this a significant switch?
Much speculation has centered on the recent damage to London’s reputation stemming from the scandal surrounding banks’ manipulation of the LIBOR interest rate. Even if some of the machinations were carried out in other cities, there is no escaping the fact that LIBOR is the London interbank offered rate. Moreover, London is the biggest center for foreign-exchange trading, the new focus of regulatory attention.
Although Bruno Iksil was a Frenchman working for the US bank JPMorgan Chase, he became known universally as the “London Whale.”
However, GFCI’s detailed results do not bear out that explanation. London’s reputational factors “are firmly above average and have not seen much change over the past five editions.”
Indeed, it seems that London’s small decline is attributable to negative scores on general factors such as the “business environment” and “infrastructure.”
Overcrowded Underground trains and Heathrow’s congestion are having an impact, though it is hard to understand why New York wins on these measures. Riding the Subway often brings unpleasant surprises, while JFK Airport is hardly a favorite among travelers (and there remains no fast rail link to it).
Yet these subtle switches at the top of the table are not the real story. From a 10-year perspective, the big gainers have been Hong Kong and Singapore.