CANBERRA (Dow Jones) – As the global economic crisis crippled traditional financial powerhouses, Australia has scaled the ranks to place second among the world's top financial centers, just behind the UK and up from 11th place last year, according to a World Economic Forum report.

The US, which topped the list last year, slipped to third position overall, due mainly to poorer financial stability scores and a weakened banking sector, the WEF Financial Development Report, published Thursday, said. Germany and France dropped out of the top 10.

Australia also ranked first for financial market access and for low risk of sovereign debt crisis, fifth for banking, and third for non-banking financial services.

"This report highlights what has been a remarkable performance for Australia's financial services sector and gives the nation well-deserved global recognition," Financial Services Minister Chris Bowen said in a statement.

"This is testament to the strength of our financial system; our solid financial skills base and well-run financial institutions; our system of prudential regulation, and proactive regulators," Bowen said.

Australia has four of the only around a dozen AA-rated banks in the world, due in part to a tight regulatory regime and domestic banks' limited exposure to poor-quality loans that were the downfall of many banks globally.

Australia has a so-called "four pillars" policy that prevents the four largest banks from merging. That has shielded the four, Australia & New Zealand Banking Group Ltd., National Australia Bank, Commonwealth Bank of Australia, and Westpac Banking Corp., from takeover and allowed them to build up profitable, dominant market positions without the need to delve into riskier lending practices.

John Brogden, chief executive of pension and managed funds industry lobby the Investment & Financial Services Association, said the results are a "testament to our deep and liquid markets, supported by Australia's superannuation (pension) and managed funds sectors."

Australia has a A$1 trillion-plus retirement savings industry, aided by the introduction of mandatory employer contributions to employee pension funds in the early 1990s.