London's Dominant Role In Finance Seen Waning
Technology, operating costs, and the development of a Europewide market will cut into London's historical role as the world's pre-eminent financial center, according to a survey by KPMG Peat Marwick.
The survey, based on responses from 64 chief and senior executives from major capital markets around the world, predicted that local specialized financial centers would gain in importance over London but that no one area would be dominant.
Although users of financial markets will undoubtedly benefit from lower costs, bankers and stock brokers will face continuing competition "from all points of the compass," the Peat Marwick report said.
Behind the Slide
Contributing to the diminution of London's role, according to the report, are these factors:
* The high cost of doing business in London.
* Formation of a European central bank.
* The development of a Europe-wide stock market
* Moves by institutional investors to do business in locations where costs, pricing are lowest and liquidity is greatest.
"It is expected that investors will support a pan-European market if it is better than the international automated stock quote system operated by the London Stock Exchange, according to the report.
Central Bank Supported
More than two-thirds of the survey respondents said they were in favor of a pan-European central bank.
More than 60% said they support a bank that monitors the capital adequacy of financial institutions and is involved in monetary and credit policies as well as emergency foreign exchange controls.
Among the institutions that participated in the survey were Banca Commerciale Italiana, Bank of Boston, Banque Nationale de Paris, Citibank, Fuji International Finance, and Hongkong and Shanghai Banking Corp.