The future of financial centres in the European Union

Résumé du document

The working of European Union was expected to be similar to the United States of America. Theorists believed that Europe will have a financial hub similiar to the Wall Street in the United Sates and questioned the future of the European Union. Establishing inter-market deals among the European stock exchanges (E.g. the creation of Euronext) seems to be the first move towards creating a global European stock exchange. However, the national interests and the needs of a country's economy is a major factor of concern. However, this will not affect the position of Europe in the financial world, even with the emergence of the Asian financial markets.

Extraits

[...] Thus, what can we imagine about the future of the European financial centres ? First, the recent links established between stock exchanges (as the creation of Euronext) seems to be the first move toward a unique global European stock exchange, despite the national special features. However, the national interests and the needs of the real economy could put a limit to this movement. But this should not affect the place of Europe among the financial world, even with the emergence of Asia and the likelyhood of a global computer financial place, because of its strategic position European financial centres have their own characteristics but the current dynamic seems to lead toward a unique European centre in a few decades There are many financial centres in Europe : at least in every country. [...]

[...] What leads to the idea of a future unique European financial centre is that last years were characterised by a huge emulation around stock exchanges financial structures. 1B. A new dynamic in the market environment in Europe B1. A new trend for European stock exchanges : the IPO Recent IPOs of Euronext, Deutsche Börse, OM Gruppen (Stockholm stock exchange) show the dynamism of the European stock exchanges. They need some money to invest and grow and the IPO was the best mean for them to find money and develop their credibility by the investors. B2. [...]

[...] The emergence of Asian economies and the internet revolution could leave European financial centres out of the stage B1. The emergence of the Asian financial centres won't affect too much European stock exchanges Asian financial markets begins to become more important. The crisis faced by Japan gives the opportunity to other markets to emerge like Hong-Kong or Shanghaï. The end of the communism in China leads many Chinese companies to partial privatisations. Given the size of the country, we can imagine the valuation of Telecom, consumer goods or utilities companies. [...]

[...] Obviously, there might be a globalization of trading activities but corporate finance centres should remain national for the main countries (France, Germany, Italy) and regional for others (one office for a group of countries). Conclusion To conclude I would say the future of European financial centres is unclear: they will surely link together or merge but there undoubtedly will remain a number of major financial markets, since financial actors can not part completely from the real economy. The European finance will have also to experience some of the European Union difficulties as the integration of Eastern-European economies. [...]

[...] On the contrary, they come back to national financial centres to be more available for their local clients. For instance, this is the case of Goldman Sachs, which is moving all its French investment banking activities from London to Paris. Apparently, French CEOs and CFOs find it difficult to trust these “guys from London” who come once a month with their whole armada but are not available to come whenever they need them. Undoubtedly, they will appreciate this move from investment banks. [...]