2023-Public-Sector-Perspectives

The “general” factors in Table 1 are valuable. But to gain a greater understanding of what determines success for an IFC, it is useful to define five specific criteria. 1. Legal and regulatory environment A sound and independent legal system and regulatory framework is arguably the most important enabler for any business to thrive, especially those in the financial industry. Acting as the building block, it gives strong and credible institutions the confidence to build their presence and run key operations as well as providing the comfort that enables international investors to place money and invest for the long term. • Legal system In layman’s language, a sound legal system is simply one that people can trust and rely on when there is a conflict. No business wants to navigate ambiguity. This system must be transparent and impartial with legal processes that are robust but efficient and accessible to all. In relation to a successful IFC, international best practice is expected, e.g., Common Law is often employed in contract enforcement around the world. In terms of property rights, it is important that foreign ownership as well as data and intellectual property are protected. • Regulatory framework A successful IFC needs to have a robust financial regulatory framework which accepts or aligns with international standards and is enforced by independent, transparent, and properly resourced regulators. From corporate governance, reporting and accounting standards, to exchange listing and takeover requirements, the key purpose is to protect consumers and investors. As institutions are facing increasing costs of compliance, the framework, and regulations, whether principle or rule-based, should be reasonably easy to navigate and follow. While multiple regulators may be necessary for different regulatory duties, e.g., accounting, banks, pensions, etc., a well-coordinated, consistent regulatory system is always preferred. 2. Market environment Critical mass is required to maintain a position as a viable international financial center. This can be accomplished by having a strong domestic corporate sector and/or being able to attract international companies to establish headquarters or raise finance in the center. To attract a critical mass of financial services players, it is crucial to have a cost-effective and enabling business environment. Listed below are some of the key features of a developed financial market which every successful IFC should have: • Liquid, efficient, and deep capital market that supports local and international issuances. Citi Perspectives for the Public Sector 13