THE financial world is plagued by cutthroat wars, but no bloodshed is ever witnessed. From the Asian financial crisis to the U.S. subprime catastrophe, a number of financial storms have swept the world in recent years. In the battle for profits, nobody is a permanent winner.
　　Despite 30-plus years of reform and opening-up and China’s economy ranking as the world’s second largest, the country still lags behind many developed countries like the U.S. and those in Europe when it comes to high finance.
　　For hundreds of years, international financial centers have played a vital role in world economic and financial development. They also bring a wealth of benefits to their host cities and countries in the fields of employment, revenue and long-term wealth generation. Financial centers also have a political dimension. When the national interest is involved, politicians pay close attention to the fate of financiers. For example, Chancellor of the Exchequer Gordon Brown championed the protection of London’s international competitiveness in finance as one of the basic prerequisites for the pound sterling to join the European Monetary Union (EMU).
　　China needs to develop its financial centers into worldclass capital hubs. The country lacks extensive expertise in this matter, and so should look at the lessons, achievements and experiences of developed countries in this regard.
　　Capitals of Capital focuses on the evolvement of such international financial centers as New York, London, Frankfurt, Paris, Zurich, Amsterdam, Hong Kong and Singapore. The story begins with the rise and fall of Amsterdam in the 17th and 18th centuries and finishes with the sub-prime mortgage crisis in 2009.
　　Different from other books on this subject matter, this work doesn’t focus on comparing and ranking these hubs, but rather probes into their evolution and the reasons behind their fall. It makes fascinating reading.
　　We learn, for example, that Amsterdam began to wane as an international financial center in the 18th century due to declining Dutch national strength and competition from Britain. Readers are also taken through New York’s rapid rise to prominence in international finance after World War II, owing to its distance from the European and Asian powers that were traumatized by the war.
　　Following on, Tokyo gradually increased in importance in international trade thanks to the liberalization policies introduced by the Japanese government in the 1970s. There is also a detailed account of how the Japanese economy developed into a bubble and eventually burst with the rapid appreciation of the Yen, and then suffered long-term stagnation. Since that time, Tokyo’s influence has subsided to an extent. 　　Youssef Cassis, the author of this book and a number of others on financial history, is a senior professor of economic and social history at the University of Geneva. His expertise shines through in Capitals of Capital. There is an old saying in China: “You look into a mirror to groom yourself, and read history to learn from the ups and downs of nations. Learning the lessons of others affords one insights into the gains and losses of life.”
　　The real value of this book from the Chinese perspective lies in its detailed analysis of the dynamics of international financial hubs, which could provide key lessons for China in its formulation of strategies to build its own international financial centers.
　　China’s financial sector sustained small losses in the recent global financial crisis, largely thanks to the relatively undeveloped and closed nature of the sector. As the country’s financial markets become more and more open, however, China will inevitably encounter financial challenges. The book’s analysis of the reasons behind the rise and fall of world financial centers, the difficulties faced by them, and lessons learned from their successes and failures is a valuable reference guide for China’s policy makers.
　　Also worthy of mention is that soon after the publication of the first edition of the book in 2006, the sub-prime mortgage crisis broke out in the U.S. In the preface to the second edition, the author indicates that he had no inkling that a financial crisis was on the way when he was writing the first edition of the book. Because of the crisis, the author has reworked and added to the last chapter of the book to provide a concise analysis of the subprime crisis. But, as he says, the lessons from the book’s other chapters are just as relevant after the latest crisis as before. No revisions to earlier chapters were made.
　　The Chinese version of the second edition of the book was translated by Chen Han, chief of the clearing department at the China Financial Futures Exchange, and published in November 2011 by China Renmin University Press.
　　title: Capitals of Capital: The Rise and Fall of International Financial Centers, 1780-2009
　　publisher: Cambridge university press
　　author: Youssef Cassis, Jacqueline Collier
　　pub date: March 2010
　　408 pages, paperback, uSD 50