I have a chapter in a book which has just been published by Oxford University Press. The book is entitled British Financial Crises Since 1825. My chapter looks at the role capital and extended shareholder liability played in assuring British banking stability from 1826 until the 1930s, a theme which is developed at length in my new book Banking in Crisis. My colleague Gareth Campbell also has a chapter in the same book. His chapter looks at the Railway Mania and and the 1847 commercial crisis.
As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of