International Correspondent Networks: Asian and British Banks in the Twentieth Century<sup>1</sup>

Simon Mollan

in The Origins of International Banking in Asia

Published in print August 2012 | ISBN: 9780199646326
Published online September 2012 | e-ISBN: 9780191745256 | DOI:
International Correspondent Networks: Asian and British Banks in the Twentieth Century1

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Using the products of an extensive and carefully compiled database this chapter presents, for the first time, a detailed examination of the network of international finance. As the need to make and receive payments worldwide grew from the middle of the 19th century onwards banks formed business relationships with each other. Through these business relationships each bank undertook to receive and pay out money on behalf of the other so creating an international mechanism through which payments could be made without the need to move large amounts of gold around the world. Instead, it could all be done through debits and credits in bank ledgers. The result was to revolutionise international trade and finance and liberate the world economy from a dependence upon the available supply of gold. However, these correspondent links were more than a payments network, for they also gave banks access to London’s money market through which surplus funds could be borrowed or lent. Despite all the difficulties experienced between 1914 and 1945 these correspondent links survived, and were only reduced in importance through the emergence of multinational banking groups in the late 20th century.

Keywords: City of London; gold; money market; international payment systems

Chapter.  5075 words. 

Subjects: Business History

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