London and New York have long been contenders for the title of the world’s financial capital. In reality this prestigious title does not exist; worldwide finance is not united. While New York deals with more mergers and acquisitions, London is one of the leading centers for international stock transactions. It also remains in first place as regards foreign exchange and specialized markets (precious metals, petroleum and so on). London had been in the lead until the early twentieth century; during the First World War, New York had risen to the forefront. After a time of decline (1920 – 40) that was nonetheless marked by the creation of the foreign exchange market, London recovered its financial primacy following the Second World War. In 1958 exchange controls were eased and the Eurobond market developed over the course of the 1960s. The 1979 abolition of exchange controls put the City of London in the lead, as did the 1986 deregulation of British markets (Big Bang).
London remains the most international of financial markets, including New York. It hosts more foreign banks than any other financial stronghold. As of April 2001 they numbered 481 (as opposed to 287 in the US and 92 in Japan). Quite logically the London banks register the highest percentage of cross-border bank loans (close to one-fifth of the world market).
The London Stock Exchange is the most international of them all. More than 500 companies originating in 60 different countries are quoted there. In 1999 alone, 7.5 million transactions were performed on foreign shares and represented over a third of the total number of transactions effected on the British market. That year London generated no less than 58 percent of international trading in stocks.
London also brings together the greatest number of large firms in Europe; 65 percent of the most important companies are represented there; one-third of them have their headquarters in the British capital (as opposed to 9 percent in Paris and 3 percent in Frankfurt).