The first section of this study was intended to do the following: (1) Set forth an intuitive model of national and international financial intermediation capable of capturing each of the functions involved in the process, as well as measures of static and dynamic efficiency; (2) Suggest strategic positioning alternatives facing banks and other firms engaged in the financial intermediation process; (3) Identify the principal determinants of competitive performance of financial firms; (4) Consider issues relating to the regulatory overlay, particularly stability versus efficiency, and the impact of regulatory structures on financial system performance; and (5) Review the alternative structures financial firms may choose to adopt, how these in turn relate to bank-industry linkages and the process of corporate control, and ultimately the dynamics of financial market development and national economic performance.

All of these issues are important in determining the competitiveness of national financial systems. Competitiveness, in turn, can be framed in terms of static and dynamic efficiency properties, discussed earlier, with static inefficiency and lack of creativity driving financial transaction streams abroad. High performance financial systems, on the other hand, may attract transactions from other financial systems, where costs or the net regulatory burdens are higher, and form the basis of an export-oriented engine of economic growth. Consequently, rigorous competition among financial services firms has increasingly been joined by equally rigorous competition among financial centres.

It should be clear from the earlier discussion that the financial services sector has grown and changed far more rapidly than many others in the world economy in recent years. Today it is one of the most structurally complex and dynamic industries in existence. It is also one of the most heavily regulated—owing to the fiduciary nature of many of its activities, its pivotal role in the execution of money and credit policies, as well as its susceptibility to recurring crises.

The remarkable revolution in this industry has created intense competition among banks and other financial services firms around the globe, as well as among the financial centres in which those firms are based and in which they operate.