The Origins and Development of Financial Markets and Institutions From the Seventeenth Century to the Present
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Preface and acknowledgments
- 1 Financial innovations and crises: The view backwards from Northern Rock
- 2 An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange and the emergence of the first central bank
- 3 With a view to hold: The emergence of institutional investors on the Amsterdam securities market during the seventeenth and eighteenth centuries
- 4 Was John Law's System a bubble? The Mississippi Bubble revisited
- 5 Sir George Caswall vs. the Duke of Portland: Financial contracts and litigation in the wake of the South Sea Bubble
- 6 The bell jar: Commercial interest rates between two revolutions, 1688–1789
- 7 Comparing the UK and US financial systems, 1790–1830
- 8 Natural experiments in financial reform in the nineteenth century: The Davis and Gallman analysis
- 9 Regulatory changes and the development of the US banking market, 1870–1914: A study of profit rates and risk in national banks
- 10 Anticipating the stock market crash of 1929: The view from the floor of the stock exchange
- 11 The development of “non-traditional” open market operations: Lessons from FDR's silver purchase program
- 12 The interwar shocks to US–Cuban trade relations: A view through sugar company stock price data
- 13 Central bank reaction functions during the inter-war gold standard: A view from the periphery
- 14 When do stock market booms occur? The macroeconomic and policy environments of twentieth century booms
- 15 Lessons from history for the twenty-first century
- Index
- References
1 - Financial innovations and crises: The view backwards from Northern Rock
Published online by Cambridge University Press: 04 August 2010
By
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Preface and acknowledgments
- 1 Financial innovations and crises: The view backwards from Northern Rock
- 2 An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange and the emergence of the first central bank
- 3 With a view to hold: The emergence of institutional investors on the Amsterdam securities market during the seventeenth and eighteenth centuries
- 4 Was John Law's System a bubble? The Mississippi Bubble revisited
- 5 Sir George Caswall vs. the Duke of Portland: Financial contracts and litigation in the wake of the South Sea Bubble
- 6 The bell jar: Commercial interest rates between two revolutions, 1688–1789
- 7 Comparing the UK and US financial systems, 1790–1830
- 8 Natural experiments in financial reform in the nineteenth century: The Davis and Gallman analysis
- 9 Regulatory changes and the development of the US banking market, 1870–1914: A study of profit rates and risk in national banks
- 10 Anticipating the stock market crash of 1929: The view from the floor of the stock exchange
- 11 The development of “non-traditional” open market operations: Lessons from FDR's silver purchase program
- 12 The interwar shocks to US–Cuban trade relations: A view through sugar company stock price data
- 13 Central bank reaction functions during the inter-war gold standard: A view from the periphery
- 14 When do stock market booms occur? The macroeconomic and policy environments of twentieth century booms
- 15 Lessons from history for the twenty-first century
- Index
- References
Summary
On September 17, 2007, the UK experienced its first bank run in over 140 years. Early that morning, nervous depositors all over the UK began queuing outside their local branches of Northern Rock bank to redeem their deposits (often their life savings) while the bank still had the cash to meet their demands. They had heard the reassuring words over the preceding weekend from Bank of England Governor Mervyn King, including the announcement that the Bank had extended a $4.4 billion line of credit, and they were worried. British deposit insurance rules limited full coverage to just the first £2,000 of a deposit and only 90 percent of the balance up to the insurance cap of £35,000. As a result, many depositors had substantial sums at risk. The run ended only when the Chancellor of the Exchequer, Alistair Darling, overruled the British regulator of banks, the Financial Services Authority, by suspending deposit insurance rules and promising unlimited 100 percent coverage to all existing depositors in the bank as of midnight, Wednesday, September 19, 2007 for the duration of the crisis. Nevertheless, as 2008 began, the crisis was still on-going with no end in sight. As of mid-December 2007, the Bank of England and the British taxpayers had extended at least £25 billion in credit to the bank (about $50 billion) but Northern Rock depositors have continued to withdraw their funds. There were even ministerial discussions about whether or not to nationalize the bank to protect the taxpayers' investment.
- Type
- Chapter
- Information
- The Origins and Development of Financial Markets and InstitutionsFrom the Seventeenth Century to the Present, pp. 1 - 31Publisher: Cambridge University PressPrint publication year: 2009
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