London trades more dollars than New York and more euros than Europe
In 2009 London handled 36.7 percent of the world's currency trading, an average of $1.85 trillion a day. More US dollars changed hands there than in New York, and more euros than in every other European city put together, a sign of how concentrated the business of money has become.
Financial services cover the work of banks, credit unions, building societies, brokers, trust companies, payment processors and some government-sponsored bodies. They include accountancy, investment banking and asset management, while insurance, credit cards, mortgages and pensions count as financial products. The phrase itself spread in the United States partly thanks to a late-1990s law, the Gramm–Leach–Bliley Act, that allowed different kinds of financial firms to merge. Some banks then simply bought an insurer or an investment bank, kept its brand and parked it in a holding company to spread their earnings.
The ordinary high-street bank is technically a commercial bank. It keeps deposits safe while allowing withdrawals, issues chequebooks, lends to people and businesses, arranges mortgages and runs standing orders, direct debits, overdrafts and internet banking. An investment bank works differently: rather than lending directly, it helps companies raise money from others by selling bonds or shares, underwrites those issues, and advises on mergers and takeovers. Its desks also design complex derivative products, research securities, and offer prime brokerage, a bundled service aimed at hedge funds. Private banks reserve their services for wealthy clients who meet a minimum net worth.
Geography matters. New York and London are the biggest centres of investment banking, but New York's business is dominated by American domestic deals, while international commerce makes up a large share of London's. Foreign exchange is handled by many banks and specialist brokers worldwide.
The sector's size and influence outside government remain contentious in many Western economies, as the Occupy Wall Street protests showed. Governments have traditionally propped up finance during widespread economic crises, yet such rescues attract less public sympathy than bailouts for other industries.
Source: Financial services
