Chapter

An Integrated European Market without an International Financial Centre, 1945–1962?

André Straus

in Financial Centres and International Capital Flows in the Nineteenth and Twentieth Centuries

Published in print July 2011 | ISBN: 9780199603503
Published online September 2011 | e-ISBN: 9780191729249 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199603503.003.0010
An Integrated European Market without an International Financial Centre, 1945–1962?

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From the end of the war until the beginning of the 1970s, Western Europe had not itself met all its own requirement for private capital. European concerns had been borrowing relatively heavily in New York because of the plentiful supply of funds and lower interest rates, and because of lower issuing costs relative to European markets which were narrow and strictly controlled. However, since the end of 1958, when the principal European currencies reverted to external convertibility on current account, a number of steps had been taken both in the United Kingdom and on the continent to remove restrictions on international capital movement and to restore a truly international security market. Indeed, the Eurodollar market eased the linkages between different European money markets, and contributed to a reduction of the spreads between short-term interest rates. The Eurobond market furthermore permitted some progress in the mobility of long-term capital within Europe, but in the early 1960s it remained rather small. Despite the progress made in the integration of economies and trade, Western Europe, lacking a common currency and with inadequate political will to integrate tax policy, budgets and regulatory frameworks was prevented from meeting the expectations that had been formed for a large integrated financial market.

Keywords: investments financing; international capital flows; financial centers; Europe

Chapter.  8845 words. 

Subjects: Business History

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