This is the first study of the entire British banking system from its origins in the late seventeenth century until the present. It analyses what made the British banking system the most resilient and trusted in the world and how it was able to maintain that for so long. It describes a process of continuous adaptation and innovation as the system responded to the challenges and opportunities that arose over three centuries, provides an explanation for the calamity that overtook the British banking system in 2007/8, and the insight required to restore it to the position it once occupied. To ach ... More

This is the first study of the entire British banking system from its origins in the late seventeenth century until the present. It analyses what made the British banking system the most resilient and trusted in the world and how it was able to maintain that for so long. It describes a process of continuous adaptation and innovation as the system responded to the challenges and opportunities that arose over three centuries, provides an explanation for the calamity that overtook the British banking system in 2007/8, and the insight required to restore it to the position it once occupied. To achieve that insight requires an understanding of the entire banking system, not a subset of banks. Banks are key components of a complex financial system continually interacting with each other, and constantly changing over time. This makes the conventional distinctions drawn between different types of banks inappropriate for any long-term analysis. These distinctions were neither absolute nor permanent but relative and temporary. Banks were also central to both the payments system and the money market without which no modern economy could function. Only with such an understanding is it possible to appreciate what the British banking system achieved and then maintained from the middle of the nineteenth century onwards, why it was lost in such a short space of time, and what needs to be done to return it to the position it once occupied. Without such an understanding the mistakes of the recent past are destined to be repeated.