Periodic Reporting for period 2 - GloCoBank (Global Correspondent Banking 1870-2000)
Okres sprawozdawczy: 2022-09-01 do 2024-02-29
The global payments system is the underlying plumbing of the international economy, but it has not attracted much interest from academic research. How do we move money around the world, and how has this changed in response to innovation in technology, wars, crises and new patterns of economic performance across the world?
GloCoBank aims to analyse the changing shape of international banking networks across the 20th century using an innovative methodology that allows greater specificity and inclusion than ever before. The correspondent banking network that will be uncovered was the basis of the global payments system, but we know very little about it. When merchants settled accounts across borders, they made transfers from the merchant’s bank to the customer’s bank. From the late 19th century, the contraction of time and space was accomplished by sending telegraph messages from the buyer’s home bank to an agent in the seller’s country to transfer funds to the seller’s bank. These interbank connections remain the underlying architecture of the global payments system but we do not have a complete sense of how they were built, managed or how they changed over time. Existing literature on global payments relies on official data on capital flows that are exclusively available at a national level, which prevents an analysis by type of bank, sub-national region, or more specific location. Moreover, these national data on bank flows are consistently available for most countries only from 1960, truncating our ability to assess the changing geography of international banking during periods of upheaval such as wars or economic crisis. To date there has been no comprehensive data source to accomplish this. GloCoBank will create and analyse a new set of data and combine it with extensive archival research to allow a much more granular assessment of the patterns and dynamics of international banking and payments. The data will capture the links between thousands of individual banks involved in international payments through bilateral correspondent banking contracts across 130 years to help us understand how the global payments system evolved.
GloCoBank aims to analyse the changing shape of international banking networks across the 20th century using an innovative methodology that allows greater specificity and inclusion than ever before. The correspondent banking network that will be uncovered was the basis of the global payments system, but we know very little about it. When merchants settled accounts across borders, they made transfers from the merchant’s bank to the customer’s bank. From the late 19th century, the contraction of time and space was accomplished by sending telegraph messages from the buyer’s home bank to an agent in the seller’s country to transfer funds to the seller’s bank. These interbank connections remain the underlying architecture of the global payments system but we do not have a complete sense of how they were built, managed or how they changed over time. Existing literature on global payments relies on official data on capital flows that are exclusively available at a national level, which prevents an analysis by type of bank, sub-national region, or more specific location. Moreover, these national data on bank flows are consistently available for most countries only from 1960, truncating our ability to assess the changing geography of international banking during periods of upheaval such as wars or economic crisis. To date there has been no comprehensive data source to accomplish this. GloCoBank will create and analyse a new set of data and combine it with extensive archival research to allow a much more granular assessment of the patterns and dynamics of international banking and payments. The data will capture the links between thousands of individual banks involved in international payments through bilateral correspondent banking contracts across 130 years to help us understand how the global payments system evolved.
The GloCoBank research team has grown and progressed the research across all of the planned actions and regions. Our work has focused on two main areas: collecting and preparing the data on the links between banks, and identifying and collecting evidence from relevant archives. The data team has constructed the main project data set from The Bankers’ Almanac from 1900 to 1985 at 5-year intervals. This required collecting details of 20,000 banks across 2500 geographical locations so that over 106,000 links between London and overseas banks around the world have been compiled. In order to investigate the impact of the financial crisis and depression in the 1930s we also collected annual data for the period 1925–1935, representing c.85,000 links. For the decades before the First World War, the data are presented in a different way, so they were collected separately. We have also collected the raw material to compile correspondent banking links to New York and for cross-border connections between the USA and Canada in the late 19thC.
In addition to collecting the data on bilateral bank links, we have gathered a wide range of qualitative evidence from archives of banks, governments and central banks in the UK (London, Edinburgh, Manchester), Europe (Basel, Zurich, Brussels, Paris, Milan, Frankfurt, Hamburg, Berlin), Latin America (Mexico), East Asia (Shanghai, Beijing, Nanjing, Tianjin, Changchun, Shengyang, Tokyo, Hong Kong) and the USA (Palo Alto, Maryland, Washington). A key strategy is to examine records from central banks as well as commercial bank participants.
Our initial publications demonstrate that correspondent banking links to London have a significant effect on the performance of international banks during the 1907 international financial crisis. We have also established the importance of intra- and inter- banking networks on financial crises in the inter-war period in one case study: Italy. From the archives, we have also uncovered the important interactions between public and private actors in the origins and early operation of the computerised architecture for global payments in the 1960s-1990s.
To share our initial results, project members presented papers at GloCoBank Research Network meetings and at 3 annual project workshops (Feb 2022, May 2023, Sept 2023). The project organised an international conference in Oxford in Mar 2023. Team members also presented their research at conferences and seminars in Germany, UK, Austria, Switzerland, the Netherlands, Luxembourg and Spain. We also discussed the project with central bankers, bankers and the public through a series of events, blog posts and interviews.
In addition to collecting the data on bilateral bank links, we have gathered a wide range of qualitative evidence from archives of banks, governments and central banks in the UK (London, Edinburgh, Manchester), Europe (Basel, Zurich, Brussels, Paris, Milan, Frankfurt, Hamburg, Berlin), Latin America (Mexico), East Asia (Shanghai, Beijing, Nanjing, Tianjin, Changchun, Shengyang, Tokyo, Hong Kong) and the USA (Palo Alto, Maryland, Washington). A key strategy is to examine records from central banks as well as commercial bank participants.
Our initial publications demonstrate that correspondent banking links to London have a significant effect on the performance of international banks during the 1907 international financial crisis. We have also established the importance of intra- and inter- banking networks on financial crises in the inter-war period in one case study: Italy. From the archives, we have also uncovered the important interactions between public and private actors in the origins and early operation of the computerised architecture for global payments in the 1960s-1990s.
To share our initial results, project members presented papers at GloCoBank Research Network meetings and at 3 annual project workshops (Feb 2022, May 2023, Sept 2023). The project organised an international conference in Oxford in Mar 2023. Team members also presented their research at conferences and seminars in Germany, UK, Austria, Switzerland, the Netherlands, Luxembourg and Spain. We also discussed the project with central bankers, bankers and the public through a series of events, blog posts and interviews.
So far, the project has digitised a huge amount of data which, for the first time, describes correspondent banking networks for London between 1900–1985, a period when London was the world’s leading international banking centre. This dataset is already offering new insights into the changing pattern and dynamics of banking during this period, supplemented by archival research. We decided to extend the core data collection beyond the original dataset as planned in the project proposal in order to capture more banks (in London and overseas). This has increased the scope of our project. Archives in East Asia have proved unexpectedly rich for a range of relevant topics and this will enhance the potential for this regional package in particular. So far, we have shown for the first time that correspondent banking links can have a significant effect on bank performance in a crisis and our annual data for the interwar period should help to enhance this area of research. By the end of the project our data will capture the links between thousands of individual banks involved in international payments across 130 years. We will prepare a visualisation of the network and how it changed over time that will be published on our website. We will also eventually make the data available for researchers from around the world.
Our pioneering archival research has uncovered resources that have not been used by researchers before. This has shown how correspondent banking works at bank level, how banks chose and managed partners, the value of contracts, and why banks maintained correspondents in centres where they also had branches. Our new evidence about the origins of the architecture and technology of the global payments system has led to fresh understanding of how the tensions between public and private interests were negotiated. Over the rest of the project, this analysis will be supplemented by archival work in the work packages covering financial crises, South America and East Asia, and further archival work in Europe and North America. We have thus made good progress toward our goals of moving beyond what international flows were, as recorded in official national accounts, and instead to focus on how these flows were managed between banks.
Our pioneering archival research has uncovered resources that have not been used by researchers before. This has shown how correspondent banking works at bank level, how banks chose and managed partners, the value of contracts, and why banks maintained correspondents in centres where they also had branches. Our new evidence about the origins of the architecture and technology of the global payments system has led to fresh understanding of how the tensions between public and private interests were negotiated. Over the rest of the project, this analysis will be supplemented by archival work in the work packages covering financial crises, South America and East Asia, and further archival work in Europe and North America. We have thus made good progress toward our goals of moving beyond what international flows were, as recorded in official national accounts, and instead to focus on how these flows were managed between banks.