Finance is the basic building block of a modern economy. An IFC (International Finance Center) is a financial centre that houses banks, venture capitalists, telecommunication offices etc. The IFC caters to customers outside its own jurisdiction, in addition to domestic customers. In order to strengthen the financial system, every country needs to set up International finance centre.
The first step to establish an international finance centre is to accept the global language that is English. For non – English speaking countries this is more important since communication is more vital when you want to become global.
Secondly the IFC should be associated with strong and vibrant revenue. IFCs require a highly developed Bond-Currency-Derivative (BCD) nexus. This requires liquid currency, with a full range of currency derivatives. IFCs attract global bond issuers into the domestic market. This requires a liquid and arbitrage-free yield curve, backed by interest rate and credit default protection derivatives.
Thirdly the international financial legislation such as IFSC http://www.ifsc.gov.bz/legislation.html has different legal jurisdiction and is made in conjuncture with all the trading nations to resolve the disputes that may occur in the international finance center itself.
Fourthly the IFC should have a good infrastructure. Financial markets rely on secure, reliable communications. The country should be well connected by roads, railways, air and sea. 24 hour electricity supply is a must. The environment should be enduring and safe for the staff with good water facility.
Fifthly for the country where a center is established there needs to be an organization apart from the main government finance banks to look into the debts and establish a separate public debt management office. A special committee should be established to deal with the legal issues and solve them at a faster rate compared to the government procedures. A Risk Management team should be established for dealing with risk scenarios such as bankruptcy and also how well it can be controlled so that it does not affect the global international finance center.
The international finance center has a general aim of strengthening of the interbank transactions and to establish and strengthen the international trade. The center also funds the regional projects at very reasonable costs.
One such center is IFC Hong Kong (http://www.ifc.com.hk/english/.). The International Finance Centre is an integrated commercial development on the waterfront of Hong Kong's Central District. It was opened in the year 1998 for handling the Asian financial crisis.