1. Finance, and monetary policies in the globalized market  capitals in economic growth …... and the problem of controlling a “sensitive” commodity  Histories of capital markets and of financial and monetary rules overlap  being the former (capitals) strongly influenced by the latter (rules)

2. Finance, and monetary policies in the globalized market  a stylized timeline: (1) before 1870: strict rules and minor integration (2) 1870-1914: a multilateral system of rules fosters high integration (3) 1914-1945: new restrictions and a trend of capital market dis-integration (4) 1945-1971: a new multilateral set of norms supports a slow integration (5) post-1971: deregulation and the globalization of capital markets

4. Finance, and monetary policies in the globalized market  once again, a non-linear pattern  determined by three variables that hardly can be combined together (1) international freedom of capital movements (2) a fixed/stable exchange rate (3) an independent economic policy  one variable must be sacrificed

5. 19th Century: the birth of a global capital market  16th-18th c.: finance’s tecniques transfer and a slow volume increase  1870-1914: market-integration  London the financial capital  consistent increase in capital flows  expansion to Europe and W. offshhoots  evidence of integration: convergence in interest rates

6. 19th Century: the Age of Gold standard and central banks  two pillars: gold standard and national central banks (1) The gold standard  a call for a common monetary standard: Conference of Paris (1867)  in the framework of the post Cobden- Chevalier high increase of international trade

7. 19th Century: the Age of Gold standard and central banks (1) The gold standard  ideas in the air: (a) monetary coordination does not threat international trade; (b) an extension of a broader trend to economic standardization

8. 19th Century: the Age of Gold standard and central banks (1) The gold standard  no formal agreement: gold vs bi-metallic monetary standard  gold becomes the standard through market integration  1879: Gold standard de facto

9. 19th Century: the Age of Gold standard and central banks (2) National central bank  two main functions:  bank to the government  steward of the financial system = “lender of last resort”  c) coordination among National banks: an idea that slowly becomes common

10. Between two wars: the disintegration of capital markets  a framework of competitive policies involving finance and currency  global capital considered responsible for 1929 crisis  a decrease in volumes and a non- convergent trend in interest rates  the gold standard “great escape”

11. Before 1929: the failed attempt  bad legacies from WWI:  failure of the Gold standard  competitive devaluation  war reparations  c) searching for a multilateral agreement: Brussels and Genoa conferences

12. Before 1929: the failed attempt  main issue: fighting currency depreciation to foster free-trade  solutions put forward: (1) gold convertibility, (2) central banks independency, (3) discipline in taxation, (4) assistance for countries with depreciated currency  problem: outdated framework (re- establish the prewar model)

13. Before 1929: the failed attempt  minor results and big failures: no international trading system rebuilding... yet, opens to future developments  a wider discipline of a multilateral free-trade, including:  fiscal policies  multilateral finance institutions  BIS: a first “world bank” candidate

14. During the “Great Depression”  1929 crisis and BIS weakness  London Conference (1933): the last call for multilateral discipline  a failure determined by crossfire vetos and lack of leadership

15. After WW 2: the rebuilding of international capital networks  until the 1960s, commodity market integration is not coupled by finance  because capital flows are kept under control  massive public investments (ERP)  but small space for private capital

16. Bretton Woods and the Age of multilateral institutions  a recap of Bretton Woods agreements  new leaders of world economy: USA (and UK)  a negative target to aim: “bad” financial and monetary policies of the loosers

17. Bretton Woods and the Age of multilateral institutions  a different framework: no immediate crisis  a clear target: reconstructing multilateral free-trade  spillovers: a discipline of monetary and financial policies  the birth of multilateral institutions

18. Bretton Woods and the Age of multilateral institutions  sparring partners negotiate to reduce agreements impact  obtaing a period of transition for par value system enforcement  increasing IMF’s and World Bank’s resources (and later ERP)  delaying the return of fixed exchange rates among currencies

19. After 1971: a new period of capital market integration  after the 1960s continuing growth of international capital movements  a process coupled by liberalization  investments (public and private) flow around involving the periphery  evidence of strong integration, rapid convergence in interest rates

20. The post-1971 era: floating currencies and financial crises  the “Nixon package” (1971): dismantling BW monetary system  a way to prevent protectionism  with effects on monetary discipline:  a “stable system of rates” instead of a “system of stable rates”  bi-lateral agreements replacing multilateral institutions  illusion: no backlash on foreign trade

21. The post-1971 era: floating currencies and financial crises  features of the new monetary “non-system”:  fixed exchange rates in small countries  Europe’s mini-Bretton Woods: EMS’ “monetary Snake”  coordinated devaluations: Plaza Hotel (1985) the Louvre (1987) agreements

22. The post-1971 era: floating currencies and financial crises  missing the point: an uncontrolled growth of capital flows  the first sign: the Latin American debt crisis (1982) and its heavy backlash on trade  the following crises: Mexico (1994-95); Asian crisis (1997- 98); Wall Street crisis (2008-?)

23. Recent trends in financial and monetary policies: the late 20th c.  a summary of main trends in finance and currency exchange:  integration of financial market  new tools and new players  no barriers, no controls, no national solutions

24. Recent trends in financial and monetary policies: the late 20th c.  a summary of main trends in finance and currency exchange:  the new strategy of existing multilateral institution  IMF tools: conditional loans  the widening of pre-conditions asked for