London Merchant Banks, the Central European Panic, and the Sterling Crisis of 1931

Accominotti, Olivier

doi:10.1017/s0022050711002427

Cited by 85 publications

(65 citation statements)

References 38 publications

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“…2, chapters 17 and 20B), Forbes (1987), James (2001, chapter 2), Accominotti (2012), Diaper (1986), Roberts (1992Roberts ( , 1995. The episode was one of the main factors causing the United Kingdom to abandon the gold standard, however.…”

Section: Discussionmentioning

confidence: 99%

Asset choice in British central banking history, the myth of the safe asset, and bank regulation

Allen

2015

JBFE

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The paper describes the use of commercial bills in Bank of England open-market operations from the earliest days of central banking in the 19 th century, when, it is suggested, the Bank of England's main objective was what would now be called macro-prudential, until the 1980s, when commercial bill purchases were an essential feature of contemporary anti-inflationary policy. It explores the relationship between government securities, central bank assets and bank liquidity regulation, exposes as a myth the belief that government securities are perfectly safe assets, and challenges the idea that central banks should confine their asset holdings to government securities. In addition, the paper argues that by making more active use of the policy instrument of central bank asset choice, by acknowledging the connection between liquidity regulation and open-market operations, and by making certain changes to the Basel 3 Liquidity Coverage Ratio regulations, central banks could both better achieve some of their macro-prudential policy objectives and stimulate high-quality bank lending. JEL classification: E52, E58

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Section: Discussionmentioning

confidence: 99%

Asset choice in British central banking history, the myth of the safe asset, and bank regulation

Allen

2015

JBFE

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“…20 There was this, and there was also the large exposure that the Bank of England had to Barings -in contrast with the lack of exposure it had to Overends. 20 The systemic importance of merchant banks will again be proved by another crucial event in British financial history -i.e., the crisis of 1931 (Accominotti 2012…”

Section: The Crisis Translated Into Increased Risk Aversion On Behalfmentioning

confidence: 99%

The Crisis of 1866

Flandreau¹,

Ugolini²

2014

British Financial Crises Since 1825

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The collapse of Overend Gurney and the ensuing crisis of 1866 was a turning point in British financial history: this was the last time a serious disruption took place in the London money market until 2007-8. The achievement of relative stability was due to the Bank's willingness to offer generous assistance to the market in a crisis, combined with an elaborate system for discouraging moral hazard. The Bank's assistance was not anonymous because it monitored the names on its discounted bills. When Overend Gurney sought extraordinary assistance from the Bank, their request was refused on the grounds that the bills offered did not comply with standard eligibility rules. The Bank's refusal forced Overend to suspend payments and there was a general panic in the market. The Bank responded by lending freely and raising Bank rate to very high levels. The new policy was crucial in allowing for the establishment of sterling as an international currency. When in 1890 Baring Bros got into trouble, however, the Bank reacted differently and set up a bailout of the failing institution. Such such a contrasting attitude was dictated by the dissimilar position occupied by Overends (a bill broker) and Barings (an accepting house) within the London money market. JEL: E42, E58, F33, N13.

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“…( 2 ) But for some modification to that view see Accominotti (2012) who argues that the Bank chose internal stability over external, and the position of London as an international financial centre.…”

Section: Notesmentioning

confidence: 99%

British Financial Crises since 1825

2014

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London Merchant Banks, the Central European Panic, and the Sterling Crisis of 1931

Cited by 85 publications

References 38 publications

Asset choice in British central banking history, the myth of the safe asset, and bank regulation

Asset choice in British central banking history, the myth of the safe asset, and bank regulation

The Crisis of 1866

British Financial Crises since 1825

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