Eurodollar Market
Critically evaluate the role of the Eurodollar market in the development of the contemporary global financial system
Burn – 1999 * Eurodollar market – established in City of London in 1950s – considered progenitor of global financial system * Marked beginning of a movement away from restrictions placed by Bretton woods system on international capital movements and return to liberal internationalism and laissez-faire order of private and central bankers that ended with collapse of gold standard in 1931 * Direct consequence of market mechanism inevitably overcoming official obstruction or friction * Eurodollar was innovation of city’s merchant and overseas bankers, looking to finance rapid increase in international trade that took place at the end of the 1950s * Deliberate state action created conditions which allowed market to evolve and operate * Direct consequence of deliberate action taken by British state to re-establish the City of London as world’s foremost international financial centre * City’s position at the centre of the Eurocurrency system was direct consequence of it having evolved within an institutional framework established over 100 years earlier * Challenges simple state/market dichotomise and suggests that the origins of the Euromarkets can be better understood with reference to ‘governance of regulatory space’ – whether by states, markets or various associational forms
INTRODUCTION
* Generally accepted that 1957 – new international money market in City of London – Eurodollar market – marked beginning of fundamental shift in international financial relations, from one directed towards national accumulation – based on regulation, to one that is responsive to demands of globall speculation and wholly unregulated * Lead directly to restoration of the city as the world’s leading international financial centre a decade later – global repercussions – re-establishing hegemony of the international
Burn – 1999 * Eurodollar market – established in City of London in 1950s – considered progenitor of global financial system * Marked beginning of a movement away from restrictions placed by Bretton woods system on international capital movements and return to liberal internationalism and laissez-faire order of private and central bankers that ended with collapse of gold standard in 1931 * Direct consequence of market mechanism inevitably overcoming official obstruction or friction * Eurodollar was innovation of city’s merchant and overseas bankers, looking to finance rapid increase in international trade that took place at the end of the 1950s * Deliberate state action created conditions which allowed market to evolve and operate * Direct consequence of deliberate action taken by British state to re-establish the City of London as world’s foremost international financial centre * City’s position at the centre of the Eurocurrency system was direct consequence of it having evolved within an institutional framework established over 100 years earlier * Challenges simple state/market dichotomise and suggests that the origins of the Euromarkets can be better understood with reference to ‘governance of regulatory space’ – whether by states, markets or various associational forms
INTRODUCTION
* Generally accepted that 1957 – new international money market in City of London – Eurodollar market – marked beginning of fundamental shift in international financial relations, from one directed towards national accumulation – based on regulation, to one that is responsive to demands of globall speculation and wholly unregulated * Lead directly to restoration of the city as the world’s leading international financial centre a decade later – global repercussions – re-establishing hegemony of the international