EH.N: CfP: Convergence and divergence of national financial systems during the gold standards, 1871-1971

[Patrice Baubeau]

CODISYNA

Convergence et divergence des systèmes financiers 
nationaux au temps des étalons-or, 1871-1971
Convergence and divergence of national financial 
systems during the gold standards, 1871-1971

OPEN CALL FOR PAPERS

September 25th, 26th and 27th 2008
VILLA CLYTHIA - FREJUS - FRANCE




International conference
Colloque international

Organization - Organisation
Patrice Baubeau - Carlo Brambilla - Luca Fantacci - Anders Ögren - Angelo Riva

Scientific Committee - Comité scientifique
Youssef Cassis - Marc Flandreau - Richard Sylla - Bruno Théret

Ce colloque est financé
This conference is supported by

Agence Nationale de la Recherche (France)

Website : http://homepage.mac.com/patrice14/


Université Paris 10 Nanterre and IDHE - 
Università Bocconi - Stockholm School of Economics


CALL FOR PAPERS - ARGUMENT


Convergence and divergence of national financial 
systems during the gold standards, 1871-1971


In the literature financial convergence appears 
as the process that draws together different 
national economies towards common institutions 
(rules) and organizations. The existence of one 
common rule is thus supposed to encourage the 
convergence process. But, notwithstanding the 
existence of an agreed upon basic rule between 
1871 and 1971 - i.e. gold as the international 
and national monetary anchor - the monetary and 
financial practices varied considerably during 
the period and between countries.

The comparative history and economics of 
financial systems stumble over many difficulties. 
First, to compare a system with another means 
most of the times to compare a nation with 
another, disregarding the internal and local 
varieties. Second, diachronic dimensions tend to 
be overlooked, freezing the characteristics of a 
given financial system in a coherent and 
long-lasting framework. Third, the term 
"financial system" is implying a high degree of 
coordination and mutual dependence between the 
elements of this system that may in reality not 
exist. Fourth, the "financial system" is 
sometimes simultaneously used in two different 
and incompatible ways in research, one as a 
description of a kind of financial organization 
and one as an "ideal type" used to test and 
characterize different national financial 
systems. In short, the notion is used both in a 
descriptive and in an explanatory way. Fifth, 
access to archives and strategic records is 
limited.

The use of different disciplinary approaches and 
of historical perspective, spanning from the 
1870s to the 1970s, allow us to tackle these 
difficulties.

Our ambition is empirical as well as 
methodological: we intend to build an analytical 
framework for the understanding of financial 
systems through a collection of cases. Shocks, 
crises, distribution of power, politics, local 
agents, interest groups, competing financial 
centers and microstructures shed different and 
complementary lights on what defines and 
transforms financial systems.

Combining different approaches certainly 
mitigates the idea of one single dominant 
explanatory variable behind the structure and/or 
evolution of financial systems. It also 
exemplifies shifts in the most significant 
variables between different periods. As a first 
hypothesis we define a financial system as an 
architecture of rules, practices, organizations 
and power balances, which constantly adapts and 
evolves.

In order to analyze convergence and divergence of 
national financial systems, we concentrate on 
four related but distinct questions:

1.  Financial crises as an instrument for 
exploring the structure of financial systems.
2.  The link between short-term credit 
organization and financial systems structure.
3.  Financial systems analyzed as networks of financial centers.
4.  From savings to investments? The interweaving 
roles of the financial and monetary systems


Session 1: Financial Centers and Financial Crises
Session organization: Anders Ögren

A study by Eichengreen and Flandreau ("The 
Geography of the Gold Standard" 1994) shows that 
not even the classical gold standard revolved 
around one financial center, i.e. London. Instead 
there were several economic zones with different 
regional financial centers for different 
peripheries. In the 2001 paper "Core, Periphery, 
Exchange Rate Regimes and Globalization" Bordo 
and Flandreau further pointed to the differences 
between core and periphery countries as some 
peripheral countries have their foreign debt 
denominated in foreign currencies; which of 
course makes them more vulnerable for financial 
crises and floating or depreciating exchange 
rates.

Thus, all countries have not through history been 
able to mitigate financial crises in the same 
manner. A too generous support of financial 
agents in times of crises may for instance lead 
to a currency crisis in more peripheral economies 
(see for instance "Financial Crises in Emerging 
Markets: A Canonical Model" by Chang & Velasco 
(1998) and "Lender of Last Resort in a Peripheral 
Economy with a Fixed Exchange Rate: Financial 
Crises and Monetary Policy in Sweden under the 
Silver and Gold Standards, 1834 - 1913" by Ögren 
(2007)). On the other hand, as summarized by 
Bagehot, a too passive acting of the monetary and 
financial authorities may also spur the crisis 
(see also "The Lender of Last Resort: Some 
Historical Insights" by Bordo (1989) and "A 
European Lender of Last Resort? Some Lessons from 
History" by Capie and Wood (1995)).

In this session we ask if the effects of the 
actions of the monetary and financial authorities 
in times of crises are different depending on the 
position of the financial center. And if the way 
the financial crisis can be met provides 
information about the importance of the financial 
center as such in relation to other financial 
centers and which periphery the financial center 
is connected to. We are of course also interested 
in the historical dynamics regarding these 
issues; i.e. how has this changed over time?


Session 2: Short-term credits and financial 
systems: norms, practices and path dependency
Session organization: Patrice Baubeau

Short term credit plays a central role in the 
making and coherence of financial systems. It 
does so through the global turnover of most 
financial intermediaries as well as through money 
issuance rules and practices. The linkage between 
monetary assets and financial activities at large 
can be established and managed by organizations 
and/or markets, but in both cases it is based on 
a specific kind of assets: short term credits and 
rely heavily on one specific kind of institution: 
Central banks.

Financial systems themselves are characterized by 
different types of short-term credits. Building a 
typology is nevertheless complex, because it 
should encompass a) quantitative dynamics; b) 
basic legal characteristics of short term bills; 
c) the channels through which they are funneled 
to money issuance or to long term finance. This 
means it is necessary to include practices and 
institutions into the typology.

Consequently, one can discriminates among 
financial systems through legal traditions, 
practices of emissions, rules governing 
monetization and the way in which short-term 
credits are traded. But this does not lead 
necessarily to dispersion, since there is a 
common issue to the different ways of 
articulating monetization and finance: avoiding 
and managing liquidity crises.

The goal of this session is to investigate how 
much theses differences are structurally 
significant and whether they create path 
dependent systems. It is also assumed that major 
crises, because they reveal the underneath 
structural weaknesses of the linkage between 
finance and money, help to understand both 
monetization processes and financial systems 
structures. To identify who creates short-term 
credits, who accepts, endorses, guarantees or 
circulates them, and how, would help us to 
precise the design of financial systems as well 
as build comparison bases with the "balance 
sheet" approach in Session 4.


Session 3: Financial systems as networks of financial centers
Session organization: Angelo Riva

National financial systems can be considered as 
networks of infra-national financial centers, 
which can develop local practices that sometimes 
diverge radically from national standards (i.e. 
legal rules). These local approaches to finance 
can, on one hand, raise frictions that segment 
the national markets and decrease its efficiency. 
On the other hand, they can be particularly 
adapted to satisfy the financial needs of a 
region, thus to boost local growth, or to deserve 
the interests of local or external incumbents. 
Although resilient, these practices are often 
broken down by financial integration and/or 
challengers, with contradictory consequences on 
both local finance and growth.

On the one hand, these local practices may imply 
the specialization of the financial center (or of 
specific institutions of the financial center) in 
either particular activities or business, often 
related to local industry. On the other hand, a 
financial center, even if not the dominant one, 
can offer a wide range of services to deserve 
diversified local/national financial needs.

Within the framework of the political and legal 
national environment, these dynamics can shape a 
hierarchy of financial centers (national, 
regional and local centers), which is 
characterized by high levels of financial 
centralization. The output of these interactions 
could also be a more horizontal financial 
centers' network, in which financial activity is 
relatively decentralized. The form of the 
national network could be also shaped by its 
interactions with the international financial 
network and its position towards its hierarchical 
structure.

All these scenarios present relative advantages 
and limits. Moreover, concerning all these 
issues, the links between financial centers 
(flows of information, capital, services and 
people) are crucial to insure the well 
functioning and the perpetuity of both the single 
financial center and the national financial 
system.

In this session, we discuss in depth the topics 
sketched above. Organizers specially welcome 
papers based on social sciences, institutional 
and organizational economics, and geographical 
approaches in historical perspective.


Session 4: From savings to investments? The 
interweaving roles of the financial and monetary 
systems
Session organization: Luca Fantacci and Carlo Brambilla

This session addresses the connection between 
savings and investments through the articulation 
of the credit and financial system with the 
monetary system. Contributions may focus on 
specific aspects in specific European countries. 
However, a comparative approach is welcome, and 
will be, in any case, the purpose of discussion 
during the workshop. The balance sheets of 
intermediaries and central banks provides 
significant sources in the tracking of systemic 
relations between assets and liabilities, and 
hence the distribution of risk, amongst the 
various actors within the credit system.

Thus, contributions will address issues such as: 
How is money creation by central banks related to 
gold reserves, foreign exchange and public debt? 
How is this money transferred and multiplied by 
the banking system and by the stock market (e.g. 
through the creation of liquidity for securities 
used as collateral)? How do the rules of the 
international monetary system, from the classical 
gold standard to the gold exchange standard to 
the Bretton Woods system, affect the mechanics of 
money creation, the dynamics of the credit cycle 
and the relations between money and credit? What 
are, in more general terms, the effects of 
banking and market regulation on the functioning 
of the multiplier (e.g. through reserve 
requirements, capital adequacy ratios, 
information disclosure policies)?


Application and Organization

Participants should send a summary of their 
proposed paper (400 words, Word or PDF), their 
preferred session and a brief CV including their 
academic affiliation-(s) before June 1st, 2008. 
Authors will be notified of acceptance no later 
than July 1st, 2008 and if accepted, will have to 
send the complete paper before September 1, 2008.

Accepted participants will be refunded for travel 
expenses and other accommodation costs.

The conference will be held in four half-day 
sessions. The third day will be devoted to the 
examination of the points of convergence between 
the papers, so as to prepare the final 
publication.


Contacts

Patrice Baubeau - patrice.baubeau at orange.fr

Luca Fantacci - luca.fantacci at unibocconi.it

Anders Ögren - Anders.Ogren at hhs.se

Angelo Riva - angelo.riva at unimi.it

Scientific Committee:

Youssef Cassis - Marc Flandreau - Richard Sylla - Bruno Théret