The World of Global Banking(part1)

The WOrld of Global Banking
Financial people know in their bones that their profession goes back a long
way. Its frequent association with "the world's oldest profession" may sim-
ply be because it is almost as old. After all. the technology of finance is
very basic, requiring little more than simple aridm~etic and minimal literacy,
and the environment in which it applies is universal--that is, any situation
that involves money, property, or credit, all of which are commodities that
have been in demand since humankind's earliest days.
These financial commodities have been put to use to facilitate trade,
commerce, and business investment and to accommodate the accumulation,
preservation, and distribution of wealth by states, corporations, and indi-
viduals. Financial transactions can occur in an almost infinite variety, yet
they always require the services of banks (whether acting as principal or
as agent) and financial markets in which they can operate.
Banks, too, therefore have a long history: a history rich in product
diversity, international scope, and, above all, continuous change and ad-
aptation. Generally, change has been required to adjust to shifting economic
and regulatory conditions, which have on many occasions been drastic. On
such occasions banks have collapsed, only to be replaced by others eager
to try their hand in this traditionally dangerous but profitable business.
New competitors have continually appeared on the scene, especially during
periods of rapid economic growth, opportunity, and comparatively light
governmental interference. Competitive changes have forced adaptations,
too, and in general have improved the level and efficiency of services offered
to clients, thereby increasing transactional volume. The one constant in the
long history of banking is, perhaps, the sight of new stars rising and old
ones setting. Some of the older ones have been able to transform themselves
i~ro players capable of competing with the newly powerful houses, but
~~e not. Thus th.e banking industry has much natural similarity to economic restructuring in general.

It is doubtful, however, that there has ever been a time in the long
history of banking that the pace of restructuring has been greater than
today's. Banking and securities markets during the 80s and 1990's is particular have been affected by a convergence of several exceptionnally
powerful forces--deregulation and reregulation, rapidly increasing com
petition and disintermediation, product innovation and tecbnology~all~
which have occurred in a spiraling expansion of demand for financial
vices across the globe. Bankers today live in interesting, if exhausting ~
hazardous, times.
Before examining these issues in detail in this book, a brief look at
where we have come from should be useful in orienting ourselves to thte
present.