How can the rise and decline of the international financial centres be explained? Contemporary economic and financial literature has identified conditions that are necessary, if not sufficient, for their development. The most important and most frequently debated of these include: stability of political institutions; strength of the currency; sufficient savings that can readily be invested abroad; powerful financial institutions; firm, but not intrusive, state supervision; a light tax burden; a highly skilled workforce; efficient means of communication; and plentiful, reliable and widely accessible information. This list may not be exhaustive, yet it is hard to refute it. We have seen that these various elements, or most of them, can be found in the centres that, at one time or another in history, have held a dominant position in the international hierarchy. Conversely, those centres that have seen their international influence fade lack one or several of these elements.

Another analytical grid, or at the very least a different departure point, nevertheless seems more apt for understanding the changes in fortune of the capitals of capital over more than two centuries. In the final analysis, the elements of explanation most commonly put forward appear to be short- and medium-term consequences rather than the underlying causes of the relative success or failure of the main international financial centres.

Staying power and change

A first conclusion prompted by long-term historical analysis is that the rise of a major centre is closely linked to the economic power of the country that hosts it.