At Liberty Street Economics, New York Federal Reserve economist Linda Goldberg provides the most succinct history of international banking we've seen. Here it is:

Actually, she has a series of charts and explanations of key changes in banking since the 1800s. The above chart gives the broad overview. Goldberg calls the rise from 1860 to 1914 "the First Age of Globalization," in which increasing connectivity between nations brought about "large-scale capital investments (such as in railways), a deepening of global finance, and expanded prosperity." The start of the First World War brought that all to a halt. Goldberg:
World War I marks the onset of the second period—what economists Raghu Rajan and Luigi Zingales call “The Great Reversal of 1914 through 1939.” This period is characterized by financial collapse and the Great Depression. They forcefully argue that this episode shows that globalization is not an immutable economic force, and a backlash against it can be disastrous. Indeed, as the previous chart shows, after restarting briefly, financial integration again collapsed with World War II and recovered slowly thereafter.
Recognizing the importance of avoiding the mistakes of the interwar period, the Allies met in Bretton Woods, New Hampshire, in 1944 to create institutions to oversee the repair of the international financial system and to ensure trade and recovery among nations. This effort gave rise to the International Monetary Fund and the World Bank, and in 1947 to the General Agreement on Tariffs and Trade (in Geneva), which evolved into the World Trade Organization. The policy focus of these organizations was institution-building, recovery, and the financing of at least temporary balance-of-payment difficulties that arose at the sovereign level.
The last period—the “Second Age of Globalization”—spans roughly 1960 through the end of the twentieth century. The era is characterized by intense financial integration. One of the most frequently used metrics of international financial integration, depicted in the chart below, demonstrates this point. Constructed using data on international assets plus international liabilities relative to GDP, the metric shows a number of periods of accelerating financial integration.
How would you define the era from 2000 to 2008, and then the period we are in now?
Read How Has the Business of International Banking Changed? here.
Filed under: globalization, trade, New York Fed, economic history, prosperity, global markets, Industrial Revolution, golden age of globalization, international banking, linda goldberg, capitalization, liberty street economics