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 Bankhas 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.
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.
There will be also discussions on reforms to involve the private sector in presenting the world financial prices. It is the aim of IMF to relieve third world debt to avoid large-scale financial crises.
Among the recent developments it is important to mention the choice of London as the location of NASDAQ-Europe. In his speech on the 5th of November 1999, the Chancellor of the Exchequer Gordon Brown it was excellent news for the City of London to launch a joint venture to create a pan-European security market.
Gordon Brown said: "NASDAQ's decision to locate its European exchange here represents a massive vote of confidence in the City. NASDAQ - Europe will strengthen the UK financial services industry and reinforce London's position as one of the worlds' top international financial centers". Mr. Brown added, "NASDAQ's presence here will be good for the wider economy too, not just in the UK but Europe as a whole. Job creation and economic growth depend on efficient capital markets sending funds to businesses to finance their expansion".
An important move in the European monetary life was the introduction of a single European currency, the Euro, on the 1st of January 1999. A separate protocol recognizes that Britain is not obliged to join the currency without a separate decision by British Government and Parliament.
So far the Bank of England has not voted to adopt the single currency. On the 6th of September 1999 Mr. Cook , the Foreign Secretary, stated that if the Euro proves to be a success, it would be in Britain's interest to join it. Britain will first have to test whether there is enough flexibility in British economy and if the Euro will promote strong international investment and boost British financial services industry.
According to the decision of European Union (EU) Heads of Government single currency notes and coins will be introduced at the beginning of 2002 at latest.
The London Club set up in the 1980s under an agreement in London, comprises over 600 big commercial banks whose credits are not covered by government guarantees or insurance. There is a steering committee of the Club which operates between the Club's sessions. The Sessions are held at the request of the