London

Definition

London is a global financial hub known for its large and diverse financial markets, including currency exchange. It plays a crucial role in international finance, influencing exchange rates and risk management strategies worldwide.

5 Must Know Facts For Your Next Test

1. London has the largest foreign exchange market in the world, accounting for nearly 40% of daily forex trading volume.
2. The London Interbank Offered Rate (LIBOR) was historically significant in setting interest rates globally but is being phased out by alternative benchmarks.
3. London's time zone overlaps with both Asian and American markets, making it a pivotal point for international trading activities.
4. Many multinational corporations and financial institutions have their European headquarters in London due to its regulatory environment and access to skilled labor.
5. Brexit has introduced new complexities for London's financial markets, impacting how firms manage currency risk and regulatory compliance.

Review Questions

• Why is London considered a pivotal hub in the global foreign exchange market?
• How does London's time zone benefit international trading activities?
• What impact did Brexit have on London's role in financial markets?

Related terms

Forex Market: A decentralized global market where currencies are traded.

LIBOR:

A benchmark interest rate at which major global banks lend to one another.

Brexit: The withdrawal of the United Kingdom from the European Union, affecting trade and finance.