Medieval Foreign Exchange c. 1300-1500
The ICMA Centre has recently won a Research Project Grant worth almost £200,000 from the Leverhulme Trust for a three-year project beginning in January 2012 and entitled “Medieval Foreign Exchange c. 1300 – 1500” (grant number RPG-193). The research team, comprising Professor Adrian R Bell and Professor Chris Brooks, and Dr Tony Moore, will examine in detail the workings of the markets for foreign currency trade in the fourteenth and fifteenth centuries.
This project will build the teams previous successful research funded by the ESRC into the medieval wool market and medieval sovereign borrowing and credit crises, and will cement their position as world leaders in the historical analysis of financial markets and in drawing policy-relevant lessons from the medieval environment for contemporary problems.
In previous projects, the team demonstrated that contrary to popular misconception, the medieval financial markets were remarkably efficient and well functioning centuries prior to the advent of computer-based asset pricing models. The current project will investigate whether the same is true of the currency markets, which were even at that time the most developed aspect of the financial system.
The study will adopt the tools and techniques of modern finance to analyse the market for foreign exchange that existed in the later Middle Ages. The project will be the first to systematically study both the short- and long-run determinants of medieval foreign currency rates. It will examine how medieval merchant societies, the forerunners of modern investment banks, sought to profit from speculating on exchange rate fluctuations. It also aims to investigate how successful medieval governments were in their attempts to control exchange rates, an issue clearly of relevance in today’s markets where there is again talk of central bank intervention in the FX markets and the possibility of competitive devaluations.
Adrian, Chris and Tony look at a medieval precedent for rate rigging and the medieval consequences on Bloomberg.com.
For more information please contact Adrian Bell: firstname.lastname@example.org