Fiche du document
2014
- handle: 10670/1.8u2xmq
- isbn: 9780199688661
- hal: hal-01293925
- doi: 10.1093/acprof:oso/9780199688661.003.0005
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info:eu-repo/semantics/altIdentifier/doi/10.1093/acprof:oso/9780199688661.003.0005
info:eu-repo/semantics/OpenAccess
Mots-clés
Financial crises Lending of last resort Financial stability International currencies E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest Rates/E.E4.E42 - Monetary Systems • Standards • Regimes • Government and the Monetary System • Payment Systems E - Macroeconomics and Monetary Economics/E.E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit/E.E5.E58 - Central Banks and Their Policies F - International Economics/F.F3 - International Finance/F.F3.F32 - Current Account Adjustment • Short-Term Capital Movements N - Economic History/N.N1 - Macroeconomics and Monetary Economics • Industrial Structure • Growth • Fluctuations/N.N1.N13 - Europe: Pre-1913Sujets proches
Money markets Specie Monetary question Money, Primitive Currency Standard of value Borrowing Lending Loans for consumption Banks, Central Central banking Central banks Banker's banksCiter ce document
Marc Flandreau et al., « The Crisis of 1866 », HAL-SHS : économie et finance, ID : 10.1093/acprof:oso/9780199688661.003.0005
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Résumé
The collapse of Overend Gurney and the ensuing crisis of 1866 was a turning point in British financial history: this was the last time a serious disruption took place in the London money market until 2007-8. The achievement of relative stability was due to the Bank’s willingness to offer generous assistance to the market in a crisis, combined with an elaborate system for discouraging moral hazard. The Bank’s assistance was not anonymous because it monitored the names on its discounted bills. When Overend Gurney sought extraordinary assistance from the Bank, their request was refused on the grounds that the bills offered did not comply with standard eligibility rules. The Bank’s refusal forced Overend to suspend payments and there was a general panic in the market. The Bank responded by lending freely and raising Bank rate to very high levels. The new policy was crucial in allowing for the establishment of sterling as an international currency. When in 1890 Baring Bros got into trouble, however, the Bank reacted differently and set up a bailout of the failing institution. Such such a contrasting attitude was dictated by the dissimilar position occupied by Overends (a bill broker) and Barings (an accepting house) within the London money market.