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British Financial Crises since 1825$
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Nicholas Dimsdale and Anthony Hotson

Print publication date: 2014

Print ISBN-13: 9780199688661

Published to Oxford Scholarship Online: November 2014

DOI: 10.1093/acprof:oso/9780199688661.001.0001

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British Financial Crises in the Nineteenth and Twentieth Centuries

British Financial Crises in the Nineteenth and Twentieth Centuries

Chapter:
(p.9) 2 British Financial Crises in the Nineteenth and Twentieth Centuries
Source:
British Financial Crises since 1825
Author(s):

Forrest Capie

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199688661.003.0002

This chapter provides an account of British financial crises since 1825 and draws the collection together, providing a unified view of British financial experience. The argues that the threatened breakdown of the payments mechanism constitutes a financial crisis, whereas individual bank failures are to be expected without necessarily leading to systemic problems. It suggests that the long period of financial stability following the 1866 crisis, depended largely on the Bank of England’s emerging role as lender of last resort. The threatened insolvency of Barings in 1890 did not impinge on the payments system and therefore it was not a financial crisis in his sense. The chapter questions what he sees as a change in the Bank’s policy away from anonymous market support in favour of individual bank rescues. It suggests that this may have encouraged greater risk-taking and played a role in developments leading to the 2007–8 crisis.

Keywords:   payments, stability, rescue, bank, discount, moral hazard

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