As part of debates about the causes, consequences and political ramifications of the credit crisis and ensuing recession (for a summary of which see Engelen and Faulconbridge, 2009), questions about the changing geographies of power in the financial services sector have elicited interest both in academic and media circles in recent years. Aalbers (2009, 39) suggests that we are witnessing a change in the powerfulness of incumbent financial centres such as London and New York as a multi-polar world emerges in which the Middle East – the United Arab Emirates, Saudi Arabia, Qatar etc. – and Asia – China in particular – and their respective financial centres increasingly play bigger and bigger roles in financial services activities. Similarly the newspaper of the City of London – City AM – reported that a shifting balance of power as a result of the financial crisis and the simultaneous growth of new financial centres means the City can no-longer be sure that its preeminent position in the global ‘pecking order’ is secure (see Hazelhurst, 2009). Indeed, in the 2009 edition of the annual Global Financial Centres Report (see City of London Corporation, 2009) it was reported that, whilst London remained atop of the rankings of financial centres, new challengers had quickly risen up the table in the period 2008 to 2009. Challengers include Singapore (32 places rise in ranking), Shanghai (117 places rise), Beijing (135 places rise), Dubai (37 places rise), Seoul (114 places rise) and Qatar (51 places rise) alongside some significant new entries into the top 75 including Riyadh. In this context, studying sovereign wealth funds (SWFs) can tell us a lot about the financial services sector. Specifically, in this commentary I suggest that studying the reactions of financial service providers, such as asset managers but also the broader complex of professional services such as accounting and law that ‘lubricate’ (Dicken, 2007) the financial system, to the growing importance of SWFs reveals much about the dynamics of the changing geographies of power in the financial services sector and the implications for incumbent financial centres such as London and New York. I make two main points. First, I suggest that the growing importance of SWFs does indeed mean that financial centres such as Doha, Dubai and Shanghai will become increasingly powerful over the coming years, in particular as financial service providers such as asset managers and related professional service firms such as law race to establish new and grow existing operations in these centres. Second, however, I also contend that this rebalancing of power relations will not be a zero sum game that necessarily leads to the erosion of the power and importance of incumbent centres such as London and New York. By taking a relational approach to understanding the geography of financial centres (on which see Beaverstock et al., 2006; Faulconbridge, 2004) that recognises the complementary nature of coexisting centres (on which see Clark, 2002) I illustrate the way that incumbent centres are actually likely to benefit from the activities of SWFs and the growing importance and power of centres such as Doha, Dubai and Shanghai .
"Faulconbridge, 2010. The definitive, peer-reviewed and edited version of this article is published in Environment and Planning A, 42, 9, 2280-2283, 10.1068/a43313"