The world needs another major financial centre
Interview with Woo Wing Thye, Distinguished Professor of Economics, University of California, Davis.
The world needs another major financial centre
The Economics of Geography

The world needs another major financial centre

Photo: Róbert Hegedüs
Mariann Őry 21/06/2023 08:00

Interview with Woo Wing Thye, Distinguished Professor of Economics, University of California, Davis.

- What role can central banks play in reaching climate and sustainability goals?

- In order to reach the climate goals, there have to be very large-scale investments because we have to change the way we generate electricity, the way we travel and the way we make things. This means that the production techniques have to be completely rebuilt. This cannot be done without the mobilisation of private finance. So the role of the central bank is to be able to provide creative schemes like blended finance in order to attract private finance into these investment programmes. 

Photo: Róbert Hegedüs

- Do these goals mean the same everywhere?

- When people talk about green transformation, they usually have in mind net zero emissions of CO2 or the protection of biodiversity. That definition of sustainability is really not adequate for poor, developing countries. How can you tell a person not to cut down trees if this is how he feeds his family? So for these countries, economic growth is key. Green energy costs more. If it wasn’t, we’d already use it everywhere. 


- How do you see Budapest’s role?

- I am very eager to find out more about Budapest being a centre of transactions in renminbi. I think the renminbi should join the US dollar as being one of the main currencies of the world because it would be safer for people to have a portfolio of different currencies and vary the composition depending on where they think the risks are going to come from.

Photo: Róbert Hegedüs

 - Which Eurasian city do you expect to become the next dominant financial centre of the world?

 - For an integrated world, financial activities need to be happening 24 hours a day. But the world is round, so the London market and the New York market are both closed for a part of this time. There’s place for another centre, and it could be Beijing, Shanghai, Tokyo, Sydney, or even Bombay. I expect it to be Shanghai, largely because the Japanese economy is shrinking in relative size, whereas China has been expanding tremendously, first overtaking Japan in economic size and coming to equal the US in purchasing power. Also, it’s among the biggest traders in the world. So it is quite natural that a financial centre would be located there. 

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