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

Olivier Accominotti (1) , Stefano Ugolini (2)

1 LSE - Economic History Department - London school of economics and political science
2 LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux

This chapter presents a history of international trade finance - the oldest domain of international finance - from its emergence in the Middle Ages up to today. We describe how the structure and governance of the global trade finance market changed over time and how trade credit instruments evolved. 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 centres (Antwerp, Amsterdam, London). This process of market centralization/product standardization culminated in the nineteenth century when London became the global centre 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.

Mots clés: Bills of exchange; Letter of credit; Market structure; Trade finance

Domaines: Economies et finances; Histoire; Finance [q-fin.GN]; Microstructure des marchés [q-fin.TR]

Olivier Accominotti, Stefano Ugolini. International Trade Finance from the Origins to the Present: Market Structures, Regulation and Governance. Eric Brousseau, Jean-Michel Glachant, Jérôme Sgard. The Oxford Handbook of Institutions of International Economic Governance and Market Regulation, Oxford University Press, In press, 9780190900571. ⟨10.1093/oxfordhb/9780190900571.013.1⟩. ⟨hal-02941654⟩