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

Olivier Accominotti, Delio Lucena and Stefano Ugolini

No 14058, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: Money market; Industrial organisation; Information asymmetry; Bill of exchange (search for similar items in EconPapers)
JEL-codes: E42 G23 L14 N20 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-his, nep-mac, nep-mon and nep-pay
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Related works:
Journal Article: The origination and distribution of money market instruments: sterling bills of exchange during the first globalization (2021)
Working Paper: The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange during the First Globalization (2021)
Working Paper: The origination and distribution of money market instruments: sterling bills of exchange during the first globalization (2021)
Working Paper: The Origination and Distribution of Money Market Instruments: Sterling Bills of Exchange during the First Globalization (2021)
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