"An Epitome or an Index: The Implications of UK Financial Services Industry (the City of London) for the UK's Entry into the Euro"

Luo, Chih-Mei. (2003) "An Epitome or an Index: The Implications of UK Financial Services Industry (the City of London) for the UK's Entry into the Euro". In: UNSPECIFIED, Nashville, Tennessee. (Unpublished)

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Abstract

Being the only economic sector singled out for special treatment in the five tests set by UK Chancellor of Exchequer to evaluate the UK's euro membership, the interest of the City of London (the shorthand of UK financial services industry) and its attitude on the euro issue therefore is indicative to this debate. This paper aims to answer whether the movements of the City could be an index for observing the UK's readiness of entering into the euro as the conventional wisdom predicts through investigating the implications of the euro membership for the City's future development. The paper proceeds mainly through three parts. The nature of the City as an international center and its main business interest will be introduced first. Second, its predominance, in terms of policy-making, in UK politics mainly derived from its economic power will follow to present. In the third part, the meaning of the European single currency, including the current debate of both sides within the City on the euro issue with the help of a few of first-hand interviews, for the City's future development will be discussed based on the analysis of its business interest. It ends with the conclusion that, in contrast to its conventional ability to promptly and exactly distinguish advantages and disadvantages from a critical international or national event, the City fails to play a role as a policy index on the UK's euro membership this time. As the euro membership represents a far more essential choice for the City--either, transforming itself into a tangible onshore financial center backed by the industrial power of the euroland; or adhering to its current offshore nature by excluding itself from the euro membership to secure a favorable institutional environment, the City is baffling between the two distinct paradigms. The indecision of the City is more like a reflection of the entire country---standing at the crossroad with an international-outlook, or globalization, on the one hand; and a more European-oriented approach, or Europeanization, on the other.

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