Australia has moved into second position, behind the United Kingdom and ahead of the United States, in the World Economic Forum’s ranking of global financial centres.
The forum released its second annual Financial Development Report on Friday, ranking 55 of the world’s leading financial systems and capital markets.
The forum said global financial centres still led the rankings, but the effects of the global financial crisis had pulled down most countries’ scores compared to last year.
“The United Kingdom, buoyed by the relative strength of its banking and non-banking financial activities, claimed the index’s top spot from the United States, which slipped to third position behind Australia largely due to poorer financial stability scores and a weakened banking sector,” the forum said.
Australia rose to second place in 2009, from 11th in 2008 and was the only country in the top five to record a rise in its score.
Financial Services Minister Chris Bowen welcomed the ranking, saying it would help the nation’s push to become Asia’s financial services hub.
“The Rudd government has policy of promoting Australia as the financial services hub for Asia for sometime and this report shows that we have a considerable advantage to build on,” Mr Bowen told reporters in Sydney.
The top five in descending order were the United Kingdom (3rd in 2008); Australia (11th in 2008); the United States (1st in 2008); Singapore (10th in 2008); and Hong Kong (8th in 2008).
“Australia showed particular strength this year, a trend that is echoed in many Asia Pacific economies,” the forum said.
The efficiency of Australia’s banks, the stability of the banking system and a low risk of sovereign debt crisis underpinned a relatively high degree of financial stability.
The rankings were based on more than 120 variables covering institutional and business environments, financial stability and the size and depth of capital markets.
The forum said the breadth of factors covered in the report meant that countries with high financial instability scores, like the UK and the US, still could achieve a high relative ranking in the index due to other strengths.
Finance Industry Council of Australia chairman Duncan Fairweather said the “excellent” result showed the strength of the Australian financial system and its resilience in the face of the unprecedented global financial crisis.
“The second place ranking highlights the need for the financial services sector and the government to continue to work hand-in-hand on stgeloping Australia as a global financial services centre.”