The days when politicians around the world sought to promote their financial sectors as engines of economic growth could not be more remote. The agenda of the forthcoming Group of 20 summit, with its heavy emphasis on re-regulation, makes such views wholly obsolete. But that leaves policymakers in the world's more financially orientated economies with a problem. Do they simply say goodbye to their supposed comparative advantage in financial services? Or can they salvage something from the wreckage?

The cynic's response would be that the comparative advantage was largely illusory anyway and that the skills of bankers in New York, London and Zurich were so destructive that they scarcely merited the name. Up to a point this is right. A big chunk of the output growth in the US, UK and Switzerland that came from financial services was indeed hot air. Estimates of trend output have had to be revised down in consequence. Yet the financial sectors of these economies are far from a busted flush, because they are not just about toxic paper and over-leveraged private equity and hedge funds.

For the leading financial centres insurance remains a big industry and the underwriting cycle is on the turn. Foreign exchange is likewise a substantial activity that continues to thrive. Alongside the basic tasks of deposit taking and lending there are activities such as fund management. Then there are related advisory services. And as long as global imbalances persist, there will be an ongoing need for financial recycling via New York and London.