Essays in Honour of Charles Goodhart, Volume Two
Edited by Paul Mizen
Chapter 3: Crises now and then: what lessons from the last era of financial globalization?
3. Crises now and then: what lessons from the last era of ﬁnancial globalization?1 Barry Eichengreen and Michael D. Bordo 1. INTRODUCTION For more than a third of a century, Charles Goodhart has sought to employ ﬁnancial history to shed light on current developments in the world economy. The New York Money Market and the Finance of Trade (1969) was an eﬀort to link the development of ﬁnancial markets to the growth of trade, a topic of clear relevance to those contemplating the connections between the euro and the Single Market. The Business of Banking (1972) sketched the links between banking and economic performance, a subject that is again timely as banking worldwide experiences a wave of consolidation. The Evolution of Central Banks (1988) developed an interpretation of the emergence of the lender of last resort that is directly relevant to the controversy over the role of the International Monetary Fund in a world of globalized ﬁnance. If a single paper can be said to epitomize this approach, it is, for us, Goodhart’s 1999 comparison of the Asian ﬁnancial crisis with late-19thand early-20th-century banking and currency crises.2 The Asian crisis, he argues, was not the singular event portrayed in recent accounts. Rather, it bore a striking resemblance to ﬁnancial crises a century before because it erupted in circumstances that, in important respects, recreated the economic and ﬁnancial environment of that earlier era. The capital ﬂows of the 1990s, like those of the 1890s, were directed toward the private...
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