Let us recall that an International Financial Centre (sometimes abbreviated to IFC) is a location which gives home to numerous banks and specialised financial intermediaries operating globally with currencies, credits and finances, conducting transactions in securities and gold. Obviously, this term of reference can be applied to numerous cities all over the world. Guided by the definition, experts prepare indices of international financial centres and ratings of global cities alike. This term of reference is a broad one. But the more sophisticated the subject’s market operations are the more restricted its definition as an international financial centre becomes. Many experts think that only London, New York and Tokio may be considered real IFCs. They have got the broadest range of financial market tools; they enter globally into domestic and cross-border market segments; and they are a part of most efficient international communication systems.

An International Financial Centre is a peculiar mechanism for managing flows of cash, capital, and investments thus resembling a kind of business hub. Oxford Economic Forecasting proposed one of the main IFC indices based on polling financial experts from 40 world countries (a city may rack up to 1000 points). Still, media prefers to refer to the index of the London based British think-tank Z/Yen Group. Its most recent version dated September 2010 includes 75 cities with Moscow occupying a breakthrough 68-th position, only one point lower than in 2009. If rejecting controversial historical metaphors, the following things seem obvious. First of all, Moscow has already become an international financial centre (at least, as it is present in the index). Second, further efforts in this direction made in 2010 (including the Insider Trading Law enacted) failed to make Russia’s investment environment more attractive.

A bird’s eye view of English-speaking media background covering the Kremlin’s plans to turn Moscow into an international financial centre gives rise to certain thoughts. International financial services professionals are still unable to rate Moscow as an IFC, further associating this bewildering combination of notions (with Moscow meaning not only a centre of population but a real notion and even notion complex) with the deepest distrust.

When translated into Russian, the English term — an International Financial Centre — has a meaning of “a global financial centre”. So, we have to deal with two notions. And what is the difference between “an international financial centre” and “a global financial centre”. And moreover, what is to be established in Russia according to the task set by the president of the Russian Federation?

Due to the dual nature of the term, half of Russian announcements on the future of an IFC in Moscow identify the abbreviation as “an international financial centre”. Another half speaks of “a global financial centre”. Meanwhile, on February 5, 2009, the Cabinet meeting approved a concept of creating an international financial centre in the Russian Federation (mentioning the whole country and not the city of Moscow!). In this case “global” notion becomes unsuitable as unable to meet most of criteria.

To further this point, it should be noted that the process of establishing a local IFC is often referred to as “building”. The term but again misguides both the Russian and the English-speaking audiences. The first disillusion is typical for Russian speaking people as it applies for subconscious connotations with continuous building projects of various kinds during the times of the USSR when citizens were encouraged to build communism.

And correspondences do occur: one should make enormous efforts in order to sky-rocket numerical performance according to a programme plan. Then the environment which is far from being perfect will transform into a perfect one, and the quality of life will grow up in the country… Generally, it corroborates a common assertion about impossibility of evolutional changes for Russia.

Additionally, the creation of an international financial centre is wrongly associated with plans for building certain constructions for accommodating such a centre. Naturally, when translated into foreign languages, the info about “building” of “an international (global) financial centre” will be very likely rendered verbatim et literatim. Immediately, one thinks of major business centres in Hong Kong and Dubai also known as “International Financial Centres”.

But let us get back to the term “an international financial centre”. We already know that its meaning is practically the same as with “a global financial centre”. But when used by Russian officials, the first word starts to mean something more significant. It seems rather strange if taking into consideration that “global” means important for the world while “international” describes something that unites more than one country (nation). For now, the term “international” is usually used as opposed to “regional”.

Thus, announcements about establishing an IFC have rather a tricky ground, and not due to purely linguistic reasons. Even if there is a way to rack Moscow up a couple of dozen points in popular indices, the city would not turn into a competitor to Hong Kong. At least, because there is no demand for another centre of such a kind. The countries of the former USSR are out of the game yet. But for them to form a demand in a Moscow as an IFC, one should wait for their economies to develop substantially. Nobody is ready to tell how long the process will take but obviously it is not a five-year term.

ЧAgainst such a background, active promotion of an International Financial Centre in Moscow looks more like a large-scale PR campaign. Welcome a million investors to Moscow and you will surely get a hundred of them, they think. Meanwhile, ordinary matters like investment legislation enhancement, infrastructure development, establishing a single financial regulator and specialised courts, creating dedicated sales areas become more pleasant and lively to deal with when you have got a catchy motto. Evidently, Russian economy has its potential for growth. With its strong currency and stable political system, it has got a solid background for developing a first-level IFC… But the same and even more is true for numerous cities in Austria, France, Italy, etc.

As far as local flurry of an IFC in Moscow is concerned, we would rather suggest that with the elections looming ahead, the promise to make Moscow “like Hong Kong or London” will be much more efficient than declaring plans for further improvement of municipal infrastructure and investment legislation. The vast majority of local electorate does not care a bit about investment legislation. And this is one of true signs showing the country’s readiness for establishing a real IFC.


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