Russian Economic Reform

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Moving Moscow’s “International Financial Center”

Published on June 20 2011
Posted by: jeff

At the recent St. Petersburg Economic Forum, President Medvedev suggested that the proposed “International Financial Center” might be housed outside Moscow – or, at least outside the present boundaries of Moscow because there is also a proposal to expand the city limits.

According to one report, “Medvedev ordered Russian authorities to consider taking the prospective International Financial Center out of Moscow. The initiative comes from the head of the Russian Sberbank, German Gref, who said that the measure would solve a number of infrastructural issues in the Russian capital.”

Would such a move be sensible?

At the present time, the supposed future Moscow “International Financial Center” is situated near the Moscow River and not far from the Moscow metro circle-line, and about 4 kilometers as the crow flies from Red Square and Tverskaya Street (ie from the political and commercial center of Moscow). It is not in the very center.

“Financial Centers” are not just about people sitting in offices doing “deals”. They are about the associated legal and accounting service companies, IT companies, and PR companies etc and their financial sector clients in their many varieties – and all of these, despite the modern world of communications, work best when people can easily meet.

Moreover, many of these suppliers of services to the “Financial Center” will have other clients who will not wish to be situated in a “Financial Center” that is located many kilometers from the political, commercial and entertainment center of Moscow.

A new – possibly “green-fields” –  location would attract some parts of the financial markets, but the risk is that it will be in those activities with lower value-added per employee, such as back-office administration, call-centers etc.

I am not burning a candle for the present location near the Moscow River, and the transport access leaves a lot to be desired. However, if a change in location is to be made it would be best not to base it on too much “centralized planning” about ideas of digital-age communicating – and to not move too much further from the very center of Moscow.