Introduction: financial governance in history

What are the central dynamics associated with financial governance today? How should we understand the historical development of financial governance and what, if any, lessons do previous historical eras hold for those preoccupied with today's issues? These are the questions which animate this chapter, explored within the framework of the contradictory pressures of national accountability and international capital mobility. Today, as in the past, those who regulate financial institutions and their activities work within parameters that pull them in two often-conflicting directions. On the one hand, they must strike a compromise between enforcing adequate prudential safeguards on institutions active within their jurisdictions without unduly constraining them in their international activities. Here lines of accountability are primarily national, albeit with significant international spillover effects. On the other hand, they must be wary of the trade-offs between maintaining their economy's satisfactory access to global financial resources and unduly amplifying its vulnerability to external shocks, which is the corollary of such openness. While this trade-off has long existed, its precise balance in terms of perceived ‘policy space’ has changed over time.