The epilogue covers the development from Basel I to III and reflections on the evolution of capital regulation in the long run. Particular emphasis is given to the divergence of risk-weighted and risk-unweighted capital ratios among large, global banks – most of which have their roots in the nineteenth century. The chapter calls for a fundamental reassessment of banking regulation. From a historical perspective, regulatory frameworks are highly path dependent and seldom fundamentally reconsidered, aiming to increase financial stability. Moreover, once we accept a certain degree of banking instability in modern banking, the focus should be on who covers losses and how significant such losses can potentially be without the involvement of the public.

In chapter 3, preparing for crisis, the narrative begins. It is told mainly chronologically and this chapter deals with the period between May 11 and May 19, but only after a brief focus on January 1931 where Harry Siepmann on the basis of the socalled Bagehot model considers what to do in case of a major financial crisis in Europe. The Bagehot model for a lender of last resort and its inadequacy in the face of an international crisis, is a theme that goes through the book’s narrative. On May 11 the Credit Anstalt failure is made known and the central bankers get ready to make sense of the information they get from Austria and elsewhere. The BIS sends Francis Rodd to Vienna and the chapter follows him closely as he communicates his findings back to the BIS and Bank of England. In a world where debt is abundant and credit scarce, Rodd presents a plan to the upcoming BIS board meeting.

After a brief introduction to the outbreak of the Austrian Credit Anstalt crisis in May 1931 and the early response by central bankers from Bank of England, the BIS and the New York Federal Reserve Bank, this chapter proceeds to present the book’s overall issues and main concepts, which will be used as a heuristic framework throughout the narrative. The main concepts of the book are radical uncertainty, sensemaking, narrative emplotment, imagined futures and epistemic communities. In the chapter, I discuss how these concepts are helpful in understanding central bankers’, and other actors’, decision-making and practices in the five month from May through September. The chapter also discusses my analytical strategy and presents the empirical material, which comes from the Bank of England, Bank for International Settlements, the Federal Reserve Bank of New York, the J.P. Morgan Archive, the Rothschild Archive and a few others. At the end of the chapter, I present the structure of the book.

Chapter 1 discusses the shift in Britain’s paper currency from being backed by the metallic standard to becoming an inconvertible currency. It explains how Britain’s war against Revolutionary France disrupted the nation’s fiscal and monetary system, leading to the provincial financial panics that preceded the financial crisis of 1797. This chapter highlights the declaration movement, a nationwide phenomenon where people declared their acceptance of paper currency as money. The movement was not limited to the metropolis and English financial centres, but also occurred across English provinces, Scotland and Ireland. This chapter examines the participants of the movement and argues that its success was due to its inclusive nature, which united people despite their geographical, political and economic differences. It concludes that the declaration movement represented the currency voluntarism that Edmund Burke identified as a key aspect of Britain’s democratic monetary system. This belief in the communal and voluntary nature of currency circulation facilitated the transition to the new regime of inconvertible paper money.

Chapter 7 introduces students to the monetary and financial dimensions of East Asian international relations, which are fragmented regionally while tied closely with the Western-dominated monetary order. Monetary power is arguably as important as military power, but it is not well understood and not commonly included in an IR textbook. As a social construction, monetary and financial power are related to but not equivalent to productive power. East Asia does not stand in isolation, because its contemporary monetary and financial practices and theories are integrated into the global system. Thus, this chapter examines U.S. dollar hegemony. Following a broader discussion of the exchange-rate regimes adopted by East Asian nations, the chapter discusses the 1997–1998 Asian Financial Crisis, a monumental event in post-war East Asian international relations triggered by a currency crisis. The chapter ends with a discussion of the 2008 Great Recession.

Taking a pause from direct focus on the Jhaveris, Chapter 4 is an interlude that outlines major shifts across the Mughal Empire between the 1680 and 1720s. I suggest that military campaigns in the Deccan region impinged the Mughal treasury and undermined administration to an extent never seen before. Officials in Gujarat started to engage in behavior that undermined Mughal sovereignty. Yet, they also had little choice as monetary resources were becoming scarce. Financial limitations impacted the quality of state machinery including the upkeep of buildings, delay in salary payments, and even the ability of officials to legitimately demand taxes. Despite this, local Gujarati poems suggest that residents preferred Mughal rule to ruthless attacks from the Maratha marauders, whose periodic raids were increasing in frequency and intensity. After Aurangzeb’s death in 1707, successive Mughal emperors were poorly equipped to revive the grandeur of their ancestors. Their short stints as emperors, sometimes as brief as a few months, led to the further breakdown of Mughal authority. This manifest most clearly in the form of rivalries between Mughal governors sent to control and profit from Gujarat. Insecure in their positions and strapped for cash, these governors turned to assaulting key members of the business fraternity in the city of Ahmedabad.

This chapter examines how the digital financial infrastructure that emerged in the wake of the 2008 GFC assisted to address the financial, economic, and health challenges presented by the COVID-19 pandemic. While the 2008 Crisis was a financial crisis that impacted the real economy, COVID-19 was a health and geopolitical crisis that impacted the real economy. In fact, during COVID-19 the financial system turned from problem child to crisis manager, having provided effective tools to support the crisis response. Notwithstanding the former, digital finance has also created new forms of risk (TechRisk).

The South Sea Bubble of 1720 was Britain’s first modern financial crisis. This chapter uses digital tools to study the development, during the early eighteenth century, of a conceptual framework describing bubbles in the financial market. It traces the emergence of the phrase ‘South Sea Bubble’ in the months and years after the crisis, alongside the more complicated patterns of evolution in what that phrase describes, ultimately arguing that there is little resemblance between the ‘South Sea Bubble’ of the 1720s and that of the present-day historical imagination. The chapter’s final claim is that the conceptual framework underpinning how we understand present-day financial crises has its origins in the latency of the words used, at the time, to describe the emerging and interlinked crises of 1720.

This chapter analyses the evolution of finance and technology. In the modern era, we mark this in four major periods. The first focused on electrification and lasted for a century until the mid-to-late 1960s. It was dominated by analogue processes and traditional banks. The second period of digitisation was marked by digitisation, including across securities markets (NASDAQ), payments (ATMs, SWIFT), mass computerisation (financial calculators, PCs), communications (Internet, mobile), and lasted 40 years. From around 2007–2008 onwards, a new trend emerged as a result of the application of a range of new technologies to finance, combined with the impact of the 2008 GFC on finance and regulation. These three driving forces– the 2008 Crisis, the application of a range of new and transformative technologies to finance, and a massive increase in regulation globally in response to 2008 and a range of financial scandals– underpinned the emergence of FinTech, short for ‘financial technology’. This third period lasted just over 10 years and saw the rise of data, and its algorithmic analysis in a process called datafication which has transformed finance. The most recent era, driven by the COVID pandemic, commenced in 2020 and is characterised by the emergence of scale, in the form of large digital platforms.

In 1995 Italy’s labor productivity was above that of the USA. In the following quarter-century Italian productivity almost stagnated. This long relative decline of an advanced country has no parallel in modern economic history. The slow adaptation to the second globalization and digital technology is ascribed to financial and political uncertainty. The chapter identifies the areas in which adaptation to the new global environment was too slow (education, R&D, reliance on SME, inefficient bureaucracy, and judiciary). We also emphasize social and political weaknesses resulting in the large public debt. Uncertainty held back domestic and foreign investments. A brief window of opportunity in the early 2000s showed Italy’s potential resilience, when economic decline could have been reversed.

The chapter is devoted to the economic, political, and social crisis of the early 1990s: a shock with long-lasting consequences. The crisis catalyzed the weaknesses of the previous political, social and economic fabric. The economic crisis had several components: a public finance crisis, an exchange rate collapse, and a fall in private investment. But the longer-lasting impact of the crisis came from the corruption scandals leading the judiciary to decapitate the main political parties that had run the country since 1945, as well as most of the industrial powerhouses. At a time when bold decisions were swiftly needed to adjust to the new economic and geopolitical landscape, the early 1990s left a legacy of political fragmentation and financial uncertainty.

The Basel Committee on Banking Supervision (BCBS) is the most important international standard setting body in the field of financial regulation. Its remit concerns banking regulation, and particularly prudential requirements of internationally active banks. The fundamental question addressed by this chapter is what explains the resilience of the BCBS and its standards, particularly in the aftermath of the 2007-2008 global financial crisis. The chapter is organised as follows: first, there is an introduction to the BCBS and the standards its members develop. Second, the failures of the Basel regime leading to the financial crisis are highlighted, as well as some possible explanations thereof. Thereafter follows a discussion about the reasons why the fundamental features of the regime are still in place even after its evident inadequacies and why the reforms adopted in the wake of the crisis are a way to safeguard the resilience of such features.

The twenty-four accessible and thought-provoking essays in this volume present innovative new scholarship on Japan’s modern history, including its imperial past and transregional entanglements. Drawing on the latest Japanese and English-language scholarship, it highlights Japan’s distinctiveness as an extraordinarily fast-changing place. Indeed, Japan provides a ringside seat to all the big trends of modern history. Japan was the first non-Western society to become a modern nation and empire, to industrialize, to wage modern war on a vast scale, and to deliver a high standard of living to virtually all its citizens. Because the Japanese so determinedly acted to reshape global hierarchies, their modern history was incredibly destabilizing for the world. This intense dynamism has powered a variety of debates and conflicts, both at home and with people and places beyond Japan’s shores. Put simply, Japan has packed a lot of history into less than two centuries.

The framework for the legal regulation of cross-border capital flows is critically important yet remains vastly unexplored and undeveloped. The preface introduces the background on the issue and explains how the book aims to fill the void and contribute detailed legal analysis to the ongoing discussion and debate. In contrast with existing literature, this book does not focus on the utility of capital flow management measures (CFMs) but on legal issues of fragmentation and associated problems. Much of the existing literature starts with the premise that members should have an absolute right to maintain CFMs – as a result, over-reading and misinterpreting of provisions is rife. This book has no pre-conceived ideological viewpoint but instead seeks to provide solid analysis on the consistency of CFMs with the trade and investment regimes and to develop a framework to manage and avoid regime conflict in existing and future treaties.