The DIFC is the story to watch in 2005

In London the mid-1980s saw the reforms known as the 'Big Bang' which broke-up the cozy cartels of the old London Stock Exchange and allowed international financial institutions to pour money into The City.

This heady combination of economic reform and deregulation came at the right time to meet the globalization of capital markets, and secured London's position as the financial capital of Europe. Even the creation of the Euro has merely enhanced London's status as a centre for foreign exchange, and not diminished it.

Dubai will be hoping that the DIFC will also prove a 'Big Bang' for the UAE and Middle East capital markets. Certainly there is a strong element of reform in the way the DIFC operates, albeit with more formal regulation than the existing rather informal UAE financial sector.

The whole aim is to introduce a raft of laws and regulations that create an English-language legal framework of the type that the largest global financial institutions are comfortable with. Dubai is out to bag the big beasts of the financial jungle, and not to create an offshore haven for small fry.

For the DIFC is to finance what the Jebel Ali Free Zone is to foreign multinational importers in the Middle East. And where the two will overlap is in the fact that they share a common infrastructure in the shape of the emirate of Dubai, with its world-class hotels and other outstanding business and leisure facilities.

It has not escaped the bankers and investment fund managers of the world that Dubai is a very pleasant and convenient city to do business in these days. The problem - before the DIFC came along - was that the financial regulatory environment was just not what they needed to keep their shareholders and home regulators happy.

Next April the first major financial institutions will physically move into The Gate - the DIFC's iconic headquarters building. There will also be a slew of new application approvals. Meanwhile, the Dubai International Financial Exchange - a brand new regional stock market - is set to open in the second half of the year.

So after much talk in 2004, there will be far more action at the DIFC in 2005. This is also truly a real estate mega-project, with the world's biggest car park in its basement, and it is going to be fascinating to see who ends up working upstairs.