2. Staff involved in prudential supervision may have inferior understanding to that of those employed in banks themselves, partly because the salaries in supervisory institutions are lower than in banks: E. Ribakova, 'Liberalization, Prudential Supervision and Capital Requirements: The Policy Trade-Offs', I[nternational] M[onetary] F[und] Working Paper, WP/05/136, July 2005. 3. For example, the self-regulation of stock markets and foreign exchange brokers. The importance of self-regulation was highlighted in the Report of the Committee to Review the Functioning of Financial Institutions [the Wilson Committee], British Parliamentary Papers 1980, Cmnd. 7937, pp. 288-98.

Rogue trading has been a persistent feature of international financial markets over the past thirty years, but there is remarkably little historical treatment of this phenomenon. To begin to fill this gap, evidence from company and official archives is used to expose the anatomy of a rogue trading scandal at Lloyds Bank International in 1974. The rush to internationalize, the conflict between rules and norms, and the failure of internal and external checks all contributed to the largest single loss of any British bank to that time. The analysis highlights the dangers of inconsistent norms and rules even when personal financial gain is not the main motive for fraud, and shows the important links between operational and market risk. This scandal had an important role in alerting the Bank of England and U.K. Treasury to gaps in prudential supervision at the end of the Bretton Woods pegged exchange-rate system.T he persistent vulnerability of major financial institutions to rogue trading is clear from the repeated episodes of this form of fraud, particularly since the globalization of the 1990s. This article examines a scandal from 1974, when Lloyds Bank suffered the largest loss to date of any British bank by a single speculator. It shows how the cozy relationship between bankers and their regulators that had developed behind capital controls and uncompetitive markets was challenged by the collapse of the pegged exchange-rate system, acceleration of international

Advocates of a more pluralistic international monetary and financial system seek to reduce reliance on a single national currency and to bring international liquidity under collective control. One recently revived proposal would transform US dollar official reserves into claims denominated in the IMF's key currency basket, Special Drawing Rights (SDRs). Drawing on new archival evidence and simulations, this article highlights issues that derailed earlier agreement on such an account and shortcomings of design and ambition revealed by

Hong Kong initially emerged relatively unscathed from the East Asian financial crisis of 1997-1998 and was able to defend the pegged exchange rate on which its status as an international financial centre depended. The soundness and transparency of the financial system is widely credited with allowing Hong Kong to avoid the worst excesses that brought down financial systems elsewhere. This article explores the evolution of the regulatory framework in the post-war period, revealing the reluctance with which the state tightened its control over the banking system. This resulted in the combination of poor supervision and constraints on competition that contributed to further instability.