International Trade Finance from the Origins to the Present: Market Structures, Regulation, and Governance

39 Pages Posted: 16 Apr 2019

See all articles by Olivier Accominotti

Olivier Accominotti

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR)

Stefano Ugolini

University of Toulouse 1 - Laboratoire d'Etudes et de Recherches sur l'Économie, les Politiques et les Systèmes Sociaux (LEREPS)

Date Written: April 2019

Abstract

We describe how the structure and governance of international trade finance - the oldest domain of international finance- evolved from the Middle Ages until today. Trade finance products initially consisted of idiosyncratic assets issued by local merchants and bankers. The financing of international trade then became increasingly centralized and credit instruments were standardized through the diffusion of the local standards of consecutive leading trading centers (Antwerp, Amsterdam, London). This process of market centralization/product standardization culminated in the nineteenth century when London became the global center for international trade finance and the sterling bill of exchange emerged as the most widely used trade finance instrument. The structure of the trade finance market then evolved considerably following the First World War and disintegrated during the interwar de-globalization and Bretton Woods period. The reconstruction of global trade finance in the post-1970 period gave way to the decentralized market structure that prevails nowadays.

Keywords: bill of exchange, letter of credit, market structure, Trade Finance

JEL Classification: F1, F3, K12, N2, N7

Suggested Citation

Accominotti, Olivier and Ugolini, Stefano, International Trade Finance from the Origins to the Present: Market Structures, Regulation, and Governance (April 2019). CEPR Discussion Paper No. DP13661. Available at SSRN: https://ssrn.com/abstract=3372860

Olivier Accominotti (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Economic History Department
Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Stefano Ugolini

University of Toulouse 1 - Laboratoire d'Etudes et de Recherches sur l'Économie, les Politiques et les Systèmes Sociaux (LEREPS) ( email )

21, Allée de Brienne
Toulouse, 31042
France

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