General argument

Political unrest and especially civil and foreign wars have historically had a major impact on financial and monetary structures. Many financial innovations can be attributed to the need to fund wars. And, without exception, wars have influenced changes in the monetary systems. The mere threat of violent political unrest or war leads to a “flight for quality”, i.e. the attempt to exchange financial assets for currency, or to redeem currency for specie or a more trustworthy currency, leading to the collapse and/or transformation of the financial and monetary structures. The outcome of conflicts determines the balance of power, which is of vital importance for international financial relations and thus also affects domestic financial and monetary structures.

Our hypotheses are:

1) To a large extent, the long-term impact of wars on the structure of financial systems is a result of the need for direct and indirect funding of the conflict and its preparation and/or of the reparations and other costs following it.

2) Monetary structures are affected by political unrest and wars not only during the course of the conflict, but also in the aftermath.

Session 1

Wars, Militarization

and Financial Systems

Patrice Baubeau

The usual distinction between financial systems is rather clear: they tend to bend either on the bank or on the market side. But when going further into detail, the distinction between these two systems gets blurred.

There are many attempts to explain the main driving force(s) behind the financial systems that exist in different countries. But, one aspect has been overlooked, namely hazard. Could major hazards, like wars, affect the very structure of a financial system? Indeed, a first glance seems to show the link between bank-based financial systems and military events: wars or heavy militarization.

a)How do financial systems evolve in case of a war?

b)Do they usually go from market to bank or the reverse? Why?

c)Do different militarization historical cases lead to different results?

d)How do usual technical explanations stand in front of war effects?

e)How do structural reforms in financial systems affect institutions?

f)Are these structural reforms aimed at financial markets or at monetary tools?

Session 2

Paper Money and the Impact of

Political Crises and Wars

Anders Ögren

The monetary system during a period of unrest is usually reformed or transformed. The monetary regime may change by the backing of money being transferred to less liquid or lower quality assets. It may also lead to the emergence of a fiat monetary system of different varieties.

It is clear that whoever wants to understand the emergence of fiat money and fiat monetary systems has a lot of insights to gain from studying the impact of political unrest and wars on monetary systems through history. More specific questions to be studied in this session are for instance:

a)How does the monetary situation change?

b)How do the institutions and organizations governing monetary issues change?

c)What makes the monetary situation change?

d)What are the empirical experiences and results of these changes?

e)Are the empirical experiences comparable between countries and over time?

f)How do the empirical observations correspond to both contemporary and current monetary theories?

g)Does the empirical experience affect the theoretical view on paper money and paper monetary systems?

Deadlines and Organization

The conference is two days long, one session a day. It will consist in a 20’ presentation by the author, followed by 10’ discussant’s comments and 10’ in-depth discussion.

Discussants will be chosen among the authors selected to the conference. Session general discussions will also be held.

Proposals should include a brief résumé of the author, the paper title and a summary. They should be sent to the organizers before April 15th 2008.

Authors will be notified of acceptation April 30th 2008. The complete working paper should be sent before June 1st 2008.

Transportation and accommodation costs will be refunded for all accepted submissions.

Scientific Committee

Youssef Cassis (Université de Genève), Marc Flandreau (OFCE, IEP de Paris), Håkan Lindgren (EHFF/Stockholm School of Economics), Richard Sylla (Stern School of Business New York University), Bruno Théret (IRISES, Université Paris Dauphine)

Organization Committee

Patrice Baubeau: IDHE – Université Paris 10 Nanterre, e-mail: patrice.baubeau”at”u-paris10.fr

Ludovic Desmedt: CEMF – Université  de Dijon, e-mail: ludovic.desmedt”at”u-bourgogne.fr

Anders Ögren: EHFF – Stockholm School of Economics and EconomiX – Université Paris 10, e-mail: anders.ogren”at”hhs.se