The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

a) cashless intra-bank and interbank transactions b) fractional reserve banking and c) central bank monopolies on note issue, the very nature of money evolved in a profoundly important way.

Economies that combined all these institutional innovations – banks, bond markets, stock markets, insurance and property-owning democracy – performed better over the long run than those that did not, because financial intermediation generally permits a more efficient allocation of resources

Credit and debt, in short, are among the essential building blocks of economic development, as vital to creating the wealth of nations

What the conquistadors failed to understand is that money is a matter of belief, even faith: belief in the person paying us; belief in the person issuing the money he uses or the institution that honours his cheques or transfers.

The volume of derivatives – contracts derived from existing securities or transactions, such as interest rate swaps or credit default swaps (CDS) – has grown even faster, so that by the end of 2006 the notional value of all ‘over-the-counter’ derivatives (excluding those traded on public exchanges) was just over $400 trillion. Before the 1980s, suc

In 1947 the total value added by the financial sector to US gross domestic product was 2.3 per cent; by 2007 its contribution had risen to 8.1 per cent of GDP. In other words, approximately $1 of every $13 paid to employees in the United States now went to people working in finance.5 Finance had become even more important in Britain, where it accou

key components of the financial system: the bond market, the stock market, the insurance market, the real estate market and the extraordinary globalization of all these markets

The decision of the Nixon administration to sever the final link with the gold standard (by ending gold convertibility of the dollar) sounded the death knell for Bretton Woods in 1971.

Once again, however, the opportunity for financial innovation was provided by war.