Global Finance and Social Europe

Global Finance and Social Europe

New Directions in Modern Economics series

Edited by John Grahl

With global finance reshaping the world economy, this insightful new book provides a full account of the EU’s financial integration strategy, together with a critical assessment arguing the case for social control over global finance. Written by acknowledged experts in European finance, this book discusses key issues from finance to general social developments, encompassing social security systems, employment relations, household saving and borrowing, and the question of economic stability. Thus far, America has been pre-eminent both in global financial markets and international banking – so how should the European Union meet this challenge? Global Finance and Social Europe constructively argues that an active response is required and highlights the importance of an integrated European financial system.

Chapter 2: International Finance

Trevor Evans

Subjects: economics and finance, financial economics and regulation, post-keynesian economics, social policy and sociology, economics of social policy


Trevor Evans INTRODUCTION Finance has long had a strongly international dimension. Modern European banking emerged in the Italian city states in the twelfth to the fourteenth century and was linked to the financing of trade with the East and the great European fairs in medieval France. As the centre of commercial capitalism shifted to northern Europe in the sixteenth century, the Italian banks lent large sums to the new financial institutions which developed in Amsterdam and they, in turn, played a key role in providing both bankers and finance for the growth of banking in Britain in the years immediately after the so-called ‘Glorious Revolution’ of 1688–9. In the eighteenth century, as Britain superseded the Netherlands as the leading capitalist nation, London emerged as Europe’s most important financial centre, characterized from the outset by a strong international orientation. Since the expansion of industrial capitalism in the nineteenth century, it is possible to identify four main periods in the development of international finance: ● ● ● ● The international gold standard (1870–1914) Breakdown and fragmentation (1914–45) The Bretton Woods system (1945–71) The re-emergence of private international finance (since the 1970s). This chapter will briefly summarize the main features of the first three periods, and then examine the period since the 1970s in more detail. THE INTERNATIONAL GOLD STANDARD The classic period of the international gold standard is usually dated from around 1870 up to the outbreak of the First World War in 1914. Britain had in fact adopted a gold-based monetary...

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