Financial system/Timelines

From Citizendium
Jump to navigation Jump to search
This article is developed but not approved.
Main Article
Related Articles  [?]
Bibliography  [?]
External Links  [?]
Citable Version  [?]
Timelines [?]
Addendum [?]
A timeline (or several) relating to Financial system.

(for an annotated timeline of bank failures and rescues see the timelines subpage of the article on that subject[1].)

1200 to 1933: financial turmoil

During this period, the banks introduced the banknote and the practice of leveraged lending, suffered frequent failures, caused periodical financial panics, prompted the creation of central banks and were occasionally rescued, but otherwise remained in largely unregulated "arms-length" relationships with their governments. A system of international finance emerged that was dominated by the gold standard. Financial instability culminated in the crash of 1929 and the Great Depression in the United States and its transmission to other countries by the operation of a mismanaged gold standard
(for an account of developments during this period see paragraphs 4.1 to 4.4 of the article on banking, and for the history of the gold standard during this period, see paragraph 2 of the article on the gold standard.)

  • 1244 Genoa's Leccacorvo bank[2]
  • 1609 Amsterdam Wisselbank founded[3] - the first central bank.
  • 1637 Dutch tulip bubble[4]
  • 1694 Formation of the Bank of England[5]
  • 1720 South Sea Bubble[7]
  • 1864 US National Bank Act - established a national banking system and the chartering of national banks.
  • 1837 US banking crisis
  • 1844 UK Bank Charter Act
  • 1866 Overend and Gurney bank rescued[[8]
  • 1890 Barings bank rescued
  • 1913 US Federal Reserve Act - established the Federal Reserve System [9]
  • 1922 German hyperinflation[1]
  • 1927 German stock exchange crash[10]

1933 to 1980: financial stability

The foundation of the current regime of floating exchange rates, the beginning of systematic financial regulation, and the establishment of international financial institutions.

  • 1933 New Deal
    US Glass-Steagall Act - creates the Federal Deposit Insurance Corporation[11]. Separated commercial banking from investment banking.[[12]
  • 1933 United States leaves the gold standard.
  • 1944 Bretton Woods Agreement[13] US dollar convertible to gold at 35$/oz and other currencies fixed to dollar. International Monetary Fund is created.
  • 1964 The Capital Asset Pricing Model (for which the 1990 Nobel Prize in Economics was to be awarded to William Sharpe, Harry Markowitz abd Merton Miller [14]) is created.
  • 1971 The US dollar is no longer convertible to gold[15]. Most exchange rates are allowed to float.
  • 1973 The Black Scholes equity pricing model [[16] is published
  • 1974 The Basel Committee for Banking Supervision[17] is created.

1980 to 2007: deregulation, innovation and growth

A period of economic stability (known as the great moderation) and - following a global relaxation of banking regulations - of unprecedented growth of innovation, of national and international financial activity and of international financial imbalances; during which there were over a hundred systemic banking crises and many other signs of financial instability.

  • 1980 US Depository Institutions Deregulation and Monetary Control Act[18]
  • 1984 Formulation of the "Too Big To Fail" doctrine[19]
  • 1986 US Savings and Loans crisis[[2]]
  • 1986 UK Building Societies Act [20][21]
    and stock exchange "Big Bang"[22].
  • 1987 Global stock market crash[23] and the beginning of a series of Scandinavian banking crises[24]
  • 1987 First CDOs issued [25]
  • 1988 Basel I[26] (The Basel Capital Accord)
  • 1989 LTCM hedge fund rescued[27]
  • 1990-92 Scandinavian banking crises
  • 1997 First Credit Default Swap (CDS) issued[28]
  • 1999 US Gramm-Leach-Bliley Act - repealed the Glass Steagall Act of 1933, and introduced other changes including expanding the Federal Home Loan Bank System.
  • 1999 The Financial Stability Forum[31] created
  • 1999 The European Monetary Union[32]
  • 2006 Basel II[33] (Revised International Capital Framework]

2007 to 2009: ` catastrophe

A banking crisis, triggered by events in a small part of the United States housing market spread outward to generate an international financial crisis, which caused a credit crunch, which caused a worldwide economic crisis, in response to which governments took monetary and fiscal action that averted threatened meltdown but threatened a series of public debt crises.

2009: New regulations

The principal innovative feature of the new regulations is the introduction of macroprudential regulations that have the purpose of defending the stability of the financial system as a whole. The other features are a series of detailed proposals designed to detect and prohibit conduct by individual financial institutions that is otherwise contrary to the public interest.

  • President Obama's proposals[34]
  • The EU Commission's proposals[35]
  • The UK Government's proposals (and the associated Turner review)[36][37][38]
Banking Act 2009[39]
Special Resolution Regime[40]
Walker Review of bank and financial system governance[41]
  • The International Accounting Standards Board's proposals[42][43] (concerning the use of "mark-to-market" accounting).