Initiative Gives a Face to the Financial Centre

A reliable partner for 10 years with a strong and weighty voice – ideally geared to meet future challenges

Volker Bouffier. © Staatskanzlei

By Volker Bouffier, Prime Minister of the State of Hesse

The initiative Frankfurt Main Finance celebrates its ten-year anniversary, and it is an immense pleasure for me to express my cordial congratulations in this regard! It means a great deal as far as the status and reputation of the initiative is concerned that Börsen-Zeitung publishes special pages on this occasion. I also explicitly wish to express my appreciation and am pleased to take this opportunity to thank those responsible for their long-standing commitment.

The Financial Centre Frankfurt is a great deal more for the state of Hesse than just a significant economic factor. It enriches our federal state as an additional facet of which we are proud. For decades now, the bank towers have been a hallmark of Frankfurt’s city silhouette. You can admire them from an aircraft when taking off or landing at Frankfurt International Airport, when driving across a number of motorways in Hesse or from the elevation of the Große Feldberg.

Over 62,000 people currently work in these impressive bank towers in Frankfurt’s city centre. They are employed by 199 banks – including some 160 international institutions. The unique network of these enterprises is augmented by first-class research facilities. Moreover, the key authorities of the European Financial Markets Supervisory Authority, the European Central Bank (ECB) and our national watchdogs, namely the Federal Financial Supervisory Authority (BaFin) and Deutsche Bundesbank are assembled here at Frankfurt. A brisk start-up scene and numerous fintechs round off the ecosystem of the financial sector that has grown in the course of many years.

Identifying and exploiting opportunities

The government of the state of Hesse intensively follows the development of this financial centre and has a reliable partner in Frankfurt Main Finance. Only in constant exchange between policymakers and industry are we able to respond to current developments of the globally networked financial industry. Policymakers are responsible for creating the necessary fundamental conditions. The shared objective of Frankfurt Main Finance and the government of Hesse is to identify and exploit opportunities in tandem with early detection of risks and taking appropriate precautions. The fact that today in Frankfurt we are talking about the most important financial centre in continental Europe shows that our cooperation is successful and that we have already achieved a great deal together. This constitutes motivation to continue our work with an ambitious and confident mindset.

 “Frankfurt Main Finance has always been the central platform for information and exchange of views. By today, 50 noteworthy members have joined the initiative, representing banks and fintechs as well as universities and consultancy firms.”

A stable and prospering economy has its foundations on a healthy financial and capital market. Just how powerful this relationship is was demonstrated during the Financial Crisis in 2008. The tremors of a stumbling financial sector were felt across the globe and in almost all economic areas and walks of life. Many of the errors previously committed suddenly raised their ugly heads in cumulative form, and today it is in the common interests of policymakers, the financial sector and the real economy that this crisis will not be repeated.

The fact that the initiative Frankfurt Main Finance was founded at this precise moment in time was an important signal and of outstanding importance for Frankfurt as a financial centre. This is particularly so because here in Frankfurt lies the monetary heart of Europe’s most important economy.

Since then, Frankfurt Main Finance has been the central platform for information and exchange. By today, 50 noteworthy members have joined the initiative, representing banks and fintechs as well as universities and consultancy firms. Understanding their needs, pooling resources and formulating positions is the collective mandate of Frankfurt Main Finance. Those responsible – led by President Dr Lutz Raettig – meet this requirement in an outstanding manner and, not least, due to their many years’ experience and remarkable international network.

 “The Financial Centre Frankfurt is a great deal more for the state of Hesse than just a significant economic factor. It enriches our federal state as an additional facet of which we are proud.”

However, the task at hand also includes creating a bridge to companies operating in the real economy and to consumers. Understanding the mechanisms of the banking and capital market – particularly in times of rapid digital change and global networking – is not easy and at the same time represents the basis for trust and confidence. Over many years, a vacuum had originated here that could only be resolved through personal commitment, information, and the breaking down of complex facts. Frankfurt Main Finance has given a face to the financial centre of Frankfurt and the institutions to which it serves as a home. This creates credibility, reputation and reliability.

No easy tightrope act

In the past ten years, the general framework conditions for the financial industry have undergone significant change. Today, the regulation standards are much higher, and supervisory structures have been adjusted in relation to 2008. In Europe, at present we clearly are on the important path towards a capital market and banking union. In terms of all agreed measures, policymakers always focus on securing financial market stability while maintaining competitiveness in an international environment. This certainly is no easy tightrope act, which is becoming even more challenging due to geopolitical changes and the process of digital transformation.

The Financial Centre Frankfurt is ideally prepared to meet these challenges. I have already described the very special network comprising all relevant market participants at a single location, with short distances between them. The stability of the financial and economic environment and the reputation of local supervisors are high and important location factors. Another positive factor is a high-performance infrastructure. With Frankfurt International Airport and the central rail and tram traffic systems, the city is ideally connected to European and international capitals, and the world’s biggest Intranet hub in terms of sheer data throughput is “Deutsche Commercial Internet Exchange (DE-CIX)” in Frankfurt. At our local universities and specialised research facilities, we train budding junior talents of which we are proud and for which we are envied at other financial locations across the globe.

We therefore have every reason to look to the future with optimism and self-confidence. Following Great Britain’s decision to leave the EU, which we greatly regret, there is nothing to stop us from moving up into leading position within the overall European structure. At present, we are experiencing intensive location-based competition between financial centres in continental Europe. The question here is who stands to benefit most from the necessary relocation in the wake of Brexit of international banks and service providers from London to the EU 27. The fact that meanwhile many experts – not only in Germany – express their assumption that Frankfurt could become the big winner amongst all continental financial centres is a partial success story of which we are proud.

Time to abandon a stand-alone attitude

At the same time, however, I am convinced that we need to abandon this insular mindset. Europe will only be competitive on an international scale if we cooperate and can truly speak of a European financial centre. Previously, around the world London was widely accepted in this position, and I can say with all due confidence that we plan to take over this role in Frankfurt in the not too distant future. The main prerequisite for this is that we remain attractive in the long run and build bridges to Paris, Dublin, Luxembourg and other financial centres. However, our link to the City of London also remains important. And in London ambassadors like Frankfurt Main Finance certainly are in demand.

Brexit offers us a momentum that we should not leave unused. For this reason, in exchanging views with other market participants, we are taking a very close look at the local framework conditions and discussing where we can lay the foundations to remain attractive in the long term. In the process, we also take into account our high standards as well as the activities of our competitors and changes unfolding in a worldwide structure. Here are two examples to show what I am talking about: For one thing, the future positioning of the clearing business of derivatives denominated in euros; for another, ideas concerning future financial supervisory structures in Europe. This is where the guidelines are being defined for the coming years and where we adopt a clear and unambiguous stance.

We perceive the current challenges as a major opportunity. It is particularly in this process that we need the strong and weighty voice of Frankfurt Main Finance. Accordingly, I look forward to the continuation of our mutual collaboration!