{"id":5776,"date":"2020-09-21T15:55:23","date_gmt":"2020-09-21T15:55:23","guid":{"rendered":"https:\/\/newmoneyreview.com\/?p=5776"},"modified":"2020-10-13T13:46:27","modified_gmt":"2020-10-13T13:46:27","slug":"the-money-wires","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2020\/09\/21\/the-money-wires\/","title":{"rendered":"The money wires"},"content":{"rendered":"

When looking at financial markets, we should pay more attention to the physical stuff\u2014the cables, boxes, chips and code\u2014without which those markets wouldn\u2019t exist.<\/p>\n

That\u2019s because the money infrastructure has a huge impact on the way society and politics function<\/a>.<\/p>\n

In the words of John Handel, our interviewee on the latest New Money Review podcast<\/em><\/a> and a specialist in financial markets\u2019 physical past, \u201ctechnical details are never just technical details\u201d.<\/p>\n

\"\"<\/p>\n

John Handel<\/em><\/p>\n

Handel, a historian, works at the University of California in Berkeley.<\/p>\n

His main area of research is the physical infrastructure of nineteenth century financial markets and its impact on financial power.<\/p>\n

In the podcast, Handel recounts the astonishing growth of global finance between 1800 and 1900, saying that the change was driven primarily by advances in technology.<\/p>\n

\u201cIn 1800 there were three stock exchanges in the world\u2014Paris, London and Amsterdam\u2014located in coffee shops and alleyways,\u201d he says.<\/p>\n

\u201cBut by the end of the 19th<\/sup> century there were almost 90 global stock exchanges, in purpose-built buildings and all connected by some form of telecommunications.\u201d<\/p>\n

The telegraph was invented in 1816, the ticker tape in 1867 and the telephone in 1876.<\/p>\n

But, from a historian\u2019s perspective, the role of telecommunications wasn\u2019t just to weave together and integrate markets, says Handel. It was also to place some centres and markets into particular positions of power.<\/p>\n

\u201cThe infrastructure encoded particular power imbalances into how messages were communicated,\u201d says Handel.<\/p>\n

\u201cLondon, for instance, was the offloading point for most telegraphy and benefited from this infrastructural position.\u201d<\/p>\n

In the podcast, Handel describes how the positioning of telegraph cables on the roof of London\u2019s Royal Exchange\u2014then the location of the London Stock Exchange\u2014played a vital role in determining competitive advantage between two early media companies.<\/p>\n

The Royal Exchange in London<\/em><\/p>\n

\"\"<\/p>\n

He goes on to explain how London managed to squeeze out Liverpool in 19th<\/sup> century financial trading because of the former\u2019s geographical location and its ability to control access to the telegraph system.<\/p>\n

At the time, Liverpool was trying to set up its own communications links with German trading companies.<\/p>\n

Handel then goes on to discuss the complex interplay between private and state interests in the development of the UK financial market\u2019s telecommunications and financial infrastructure.<\/p>\n

Over time, he says, some financial markets used different techniques to cordon off and then monopolise public telegraph wires.<\/p>\n

And, he says, some of the results of that 19th<\/sup> century battle over access cables are still evident.<\/p>\n

\u201cFinancial markets have become more opaque and closed off. We\u2019re still seeing the long tail of infrastructural monopolies over financial information,\u201d Handel says.<\/p>\n

Meanwhile, the 2008 crisis has led to a new period of experimentation in finance; we have entered a period of upheaval in the way financial markets are put together<\/a>.<\/p>\n

From a technological perspective, Handel says in the podcast, new technologies like bitcoin and blockchain deserve critical attention from the scholarly community because of their innovative settlement structures.<\/p>\n

But there may be a long way to go before we can work out who the winners and who the losers will be from the current disruption, suggests Handel.<\/p>\n

While studying the metal wires of money and finance helps illuminate history<\/a>, scientific progress by itself only goes so far, he says.<\/p>\n

\u201cTo impose real, meaningful, systemic change on infrastructures takes a lot more than simply getting the technology right,\u201d he says.<\/p>\n

Sign up here<\/a> for our monthly newsletter<\/em><\/p>\n

Click here<\/a> for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

When looking at financial markets, we should pay more attention to the physical stuff\u2014the cables, boxes, chips and code\u2014without which those markets wouldn\u2019t exist. That\u2019s because the money infrastructure has […]<\/p>\n","protected":false},"author":3,"featured_media":5775,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1013,1012,1014],"tags":[1851,1850,1849,1091,1852,1853],"class_list":{"0":"post-5776","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-account","8":"category-exchange","9":"category-payment","10":"tag-finance","11":"tag-infrastructure","12":"tag-john-handel","13":"tag-money","14":"tag-telegraph","15":"tag-telephone"},"yoast_head":"\nThe money wires - New Money Review<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/newmoneyreview.com\/index.php\/2020\/09\/21\/the-money-wires\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The money wires - New Money Review\" \/>\n<meta property=\"og:description\" content=\"When looking at financial markets, we should pay more attention to the physical stuff\u2014the cables, boxes, chips and code\u2014without which those markets wouldn\u2019t exist. 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