International financial centers in Asia: Contest, competition and possible trajectories

“Money makes the world go around” according the popular cliché of the 1968 film classic, Cabaret. Perhaps more to the point, of course, is that money going around the world makes money, indeed great fortunes for those international financial centres (IFC) able to interdict the vast sums of fast moving money. For the winners, the pickings are lucrative and getting larger. By one estimate, for example, the value of the stock of wealth held offshore now stands at US$41 trillion dollars, up from US$6 trillion a decade earlier and continuing to grow (Hampton and Christensen, 2002: 1657; Bailly, 2008). Similarly, the volume of cross-border capital flows have expanded on average at 14.2% annually since 1980, up from US$500 billion to US$8.231 trillion in 2006–2007 — an eightfold increase since 1990 alone. And total cross-border investments now stand at a massive US$74.5 trillion (Farrell et al., 2008: 13–15). All this, however, is dwarfed by the daily turnover in traditional foreign exchange markets which currently stands at US$3.21 trillion or US$3,254 trillion annually (BIS, 2007: 1). Indeed, if the daily turnover of non-traditional derivative products is added to the mix (US$2.1 trillion), then total daily turnover in foreign exchange markets now runs at a staggering US$5.31 trillion (BIS, 2007: 4). Copyright © 2011 Darryl S.L. Jarvis and Anthony Welch.