The European Research Council (ERC) has awarded Professor Catherine Schenk a €2.4M grant for a project to identify and analyse the international network of correspondent banking relationships across the 20th century.
The bilateral correspondent banking network was the basis of the global financial system and the trade and specialization that drove global development, but scholars know very little about it. When merchants settled accounts across borders, they did so through transfers from the merchant’s bank to the customer’s bank. From the time of the telegraph in the late 19th century, financial institutions shrank time and space by sending telegrams from the buyer’s home bank to an agent in the seller’s country to transfer funds to the seller’s bank. These interbank connections remain the underlying architecture of the global payments system, but we do not have a complete sense of how they were built, managed, or how they changed over time.
Moreover, existing literature on global payments relies on official data on capital flows that are exclusively available at a national level. This prevents an analysis by type of bank, sub-national region, or more specific location. This is compounded by the fact that national data on bank flows are also only consistently available for most countries from 1960. The limits of current data truncate our ability to assess the changing geography of international banking during periods of upheaval such as wars, economic crises, or depressions.
This five-year project, entitled Global Correspondent Banking 1870–2000 (GloCoBank), will analyse the changing shape of international banking networks across the 20th century using an innovative methodology. GloCoBank will create and analyse a new set of data and combine it with extensive archival research, which will allow a granular assessment of the patterns and dynamics of international banking and payments. The data will capture the links between thousands of individual banks involved in international payments through bilateral correspondent banking contracts across 130 years.
The project team will include opportunities for six postdoctoral researchers.
