Sydney is failing in its quest to become a global financial centre, with a new report showing it has quickly fallen behind big Asian cities in a world ranking, raising questions about the efficacy of the federal government's tax settings and levels of regulation.

The interim report of the financial system inquiry being chaired by David Murray said "coordination of Australia's international financial integration could be improved".

Dropping: Sydney has fallen from 11th in 2009 to 23rd both this year and last. Credit:Rob Homer

According to the Global Financial Centres Index, published by the Z/Yen Group this week, Sydney is ranked 23rd in a global survey of desirable global financial centres.

Sydney's drop from the top 20 attractive financial centres has been relentless. In 2007, it was 9th on the list, 11th in 2009, it placed No. 16 in 2012, and then in 2013 and 2014 it landed at 23rd spot.