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1995 represented 30% of Global turnover and was more than the turnover of

New York and Tokyo combined.

. The London Stock Exchange which is the biggest trade center for overseas equities in the world; it makes 55% of global turnover.

. The world’s second largest fund management center, after Tokyo.

. One of the world’s biggest markets in financial futures and options.

. One of three largest international bond centers in the world.

Britain’s international role in the world monetary and financial fields became particularly in the late 1980s.

Deregulation has been the main catalyst in increasing the City’s role as an international financial center. Fundamental reforms of 1986, known as Big
Bang affected the London Stock Exchange tremendously, because any foreign financial institution can now participate in the London money market. “What we were trying to do”, in the words of a former Deputy Chairman of London
Stock Exchange, “ was to create a new market, not one just oriented toward the UK, but one that can become international”. It was intended to secure
London as the leading financial center of Europe, and the third in the world alongside New York and Tokyo.

Many foreign banks and finance houses tried to profit from the deregulation, some by direct competition and others by buying long- established City enterprises. Before the Big Bang all City stockbroking firms were British. By 1990 one hundred fifty four out of four hundred and eight were foreign owned. The main investors in British stockbroking are the United States, Japan and France (also see Chapter 2, The Stock
Exchange).

British banks, insurance companies, building societies, and other money lenders often prefer to invest in other areas, rather than industry, in contrast with Britain’s competitors, for example Germany and Japan, where the level of industrial development is higher.

Britain strongly supports the removal of national regulations and exchange controls which restrict the creation of common market in financial services. London is a major center for international banking. Altogether five hundred sixty one foreign banks are represented in Britain. They employ about 40.000 people and provide different services in many parts of the world.

Japan and the United States are the two countries with most banks represented in London (see the table attached). Assets/liabilities of overseas banks in Britain have doubled in the last ten years. Overseas banks have a very high proportion of their operations in foreign currency.

Since the end of 1920s the Moscow Narodny Bank has been operating in London to deal with transactions with the Soviet Union and Russia now.

A number of British banks have their head offices in Britain but operate mainly abroad. Standard Chartered is the major bank in this sector: it has a network of over 600 offices in more than 40 countries and employs over
25.000 people. Standard Chartered’s activities are concentrated in Asia,
Africa and Middle East.

British banks are developing innovative banking services in their overseas operations. For example Standard Chartered has opened the first fully automated branches in Hong Kong and Singapore. Satellite dishes have been installed in Barclays’ branches in Zimbabwe

London and Tokyo are the main world centers for eurocurrency dealings. The euromarket began with eurodollars - US Dollars lent outside the United
States - and now has developed into a powerful market of currencies lent outside their domestic marketplace. Transactions can be carried out in eurodollars, eurodeutschmarks, euroyen, and so on. So, euroloans are short- term trances (three to six months) given by banks at the LIBOR rates.
Eurobonds are issued for periods of five to twenty years in currencies other than that of the issuing country.

The London International Futures Exchange trades on the floor of the Royal
Exchange building. Over 200 banks and other financial institutions, both
British and foreign, are members of the market. In fact over 70% are overseas-owned. They make contracts in British, German, Italian, and
Japanese Government bonds.

In 1995 LIFFE announced new linking agreements with the Tokyo International
Financial Futures Exchange and Chicago Board of Trade. In 1996 LIFFE merged with the London Commodity Exchange, which is Europe’s primary market for trading futures and options contracts in cocoa, coffee, sugar, wheat, potatoes.

Anyone may deal in gold but, in practice, dealings are largely concentrated in the hands of five members of the London gold market. Around 60 banks and often financial companies participate in the London gold and silver markets. Trading is done by telephone and electronic communications links.
The five members of the London Bullion Market Association meet twice daily to establish a London fixing price for Gold and this price is a reference for world-wide gold dealings.

Chapter 5.

Recent Financial Institutions (the London Club, Britain in the IMF, British

Banks in Russia).

The International Monetary Fund (IMF) and the London Club can not be properly described as recent institutions but it is important to note their recent activities in the light of the financial problems in Russia.

The IMF was founded in 1944 to secure international monetary cooperation and stabilize exchange rates. Operating funds are subscribed by member
Governments according to the volume of their international trade, their national income and their international reserve holdings. Members with temporary difficulties in their international balances of payments may purchase or get credits form the IMF of the foreign exchange they need at fixed rates if they meet the required conditions. Russia applied to the IMF for credits.

Great Britain plays an important role in the IMF. On the 10th of September
1999 the Сhancellor of the Exchequer Gordon Brown was appointed to the
Interim Committee of the IMF. The Committee was established in 1974 to advise the IMF on the management of the international monetary system as well as on dealing with any sudden shock to the world money system. The
Chancellor will lead discussions on the reform of the Interim Committee after the proposals of the G7 Finance Ministers.

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