The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange During the First Globalisation

52 Pages Posted: 17 Oct 2019 Last revised: 23 Oct 2019

See all articles by Olivier Accominotti

Olivier Accominotti

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

Delio Lucena

University of Toulouse

Stefano Ugolini

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

Multiple version iconThere are 2 versions of this paper

Date Written: October 2019

Abstract

This paper presents a detailed analysis of how liquid money market instruments - sterling bills of exchange - were produced during the first globalisation. We rely on a unique data set that reports systematic information on all 23,493 bills re-discounted by the Bank of England in the year 1906. Using descriptive statistics and network analysis, we reconstruct the complete network of linkages between agents involved in the origination and distribution of London bills. Our analysis reveals the truly global dimension of the London bill market before the First World War and underscores the crucial role played by London intermediaries (acceptors and discounters) in overcoming information asymmetries between borrowers and lenders on this market. The complex industrial organisation of the London money market ensured that risky private debts could be transformed into extremely liquid and safe monetary instruments traded throughout the global financial system.

Keywords: bill of exchange, Industrial Organisation, information asymmetry, money market

JEL Classification: E42, G23, L14, N20

Suggested Citation

Accominotti, Olivier and Lucena, Delio and Ugolini, Stefano, The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange During the First Globalisation (October 2019). CEPR Discussion Paper No. DP14058. Available at SSRN: https://ssrn.com/abstract=3471251

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

Delio Lucena

University of Toulouse ( email )

41 Allées Jules Guesde - CS 61321
TOULOUSE
France

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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