List of tables vii
List of figures viii
List of abbreviations ix
Acknowledgements xi
1 Introduction 1
2 The emergence of financial centres 4
A general survey 4
The emergence of London and Frankfurt 12
Implications for future developments 17
Appendix 2.1: Motives for EU alliances 20
Appendix 2.2: Economic Darwinism 20
3 On the optimal design of an international financial centre 24
Three studies on financial centres 24
The findings 28
An analysis 40
Appendix 3.1: Desirability bias 47
4 The rules of the game: Regulation of financial services 49
An overview 49
A blueprint for Europe’s financial markets 55
Some issues 61
5 A game theory approach to financial centres 69
Some theory 69
An application: London and Frankfurt 76
vi Contents
An extension: Frankfurt and Paris versus London 87
Appendix 5.1: Further evidence 90
6 Conclusions: Some implications for London and Frankfurt 91
A summary 91
A European and an international financial centre 93
Geography still matters 95
7 Epilogue: Recent developments 97
Stock exchanges 97
Derivatives 99
The impact of EMU 101
Literature 106
Appendices 114
A The 1996 Survey 114
B Other surveys 136
C The 1996 survey: Results 139
Index 150