Part I A Look Back
1 Evolution of Finance
Venice, April 1470
1 The functions of finance
2 The first step towards managing financial risk: diversification and collateral
3 The second step towards managing financial risk: limited liability, bankruptcy laws, seniority rules, balance–sheet structure
4 The third step towards managing financial risk: creating tradable instruments and liquidity in organised markets
5 The final step towards managing financial risk: derivatives and financial engineering
6 Could the acceleration in financial innovation since 1970 have been predicted?
2 The Americanisation of Global Finance
Minnesota Banc Corporation
1 The emergence of the American model of finance
2 The crowning achievement: risk–management finance
3 Maintaining market liquidity: the sine qua non of the "American model"
4 Global finance: the result of exporting the "American model"
3 Dramatic Events
How George Soros sees it
1 The EMS crisis of 1992–93
2 Metallgesellschaft: in the red or in the black?
3 Barings: victim of high–leveraged speculation and loose controls
4 Bankers Trust: caveat emptor
5 David Askin: the fallen star of the mortgage–backed securities sky
6 Instability in emerging markets: Mexican tequila
7 Hedge funds and the collapse of LTCM
Part II Derivatives and Their Markets
4 The Revolution in Risk Management
Farming for the future
1 What can derivatives achieve?
2 Price discovery and volatility
3 Is risk management a fundamental corporate objective?
4 Risk management: science or fad?
5 Risk management: some examples
5 Mutualisation of Risk on Exchanges
Chicago′s other side
1 Evolution of exchange–traded financial derivatives
2 Organisation of the exchanges
3 What makes a successful exchange–traded contract?
4 New product developments on the exchanges
5 Exchanges for a global market
6 Customised Risk Management in OTC Markets
How to lose money on a long put when markets crash
1 Market developments
2 Significant bank involvement
3 Contagion risk
4 Regulatory inadequacies for the specificities of OTC markets
5 New developments
Part III Public Policy Options
7 Are Derivatives a Threat to Global Financial Stability?
The global financial crash of October 2002
1 Systemic risk illustrated with the crises in Asia and Russia
2 Derivatives: the dynamite for financial crises
3 Global derivative finance: the fuse for contagion
8 Challenges for the Established Financial Order
The butterflies of finance
1 The classical paradigm of financial policy
2 Paradise lost
3 Reducing systemic risk: the Basle approach
9 A Financial Policy Model for the Next Century
The challenge of global money
1 Reform of the international financial system
2 The architecture for regulatory rethinking
3 Risk management through clearing–houses
4 Phasing out the banking franchise and institutional regulation
5 Redefining the relationship between central banks and financial intermediaries
Part IV A Look into the Future
10 Derivatives: the Future of Finance
Antofagasta (Chile), summer of 2020
1 The ascent of institutional investors
2 Ownership and corporate governance
3 Macro futures
4 Real estate futures
5 The end of banking?
1 The origin of the species
2 OTC versus exchange–traded contracts
3 Americanisation of global finance
4 Risk management: one of the most important innovations of the 20th century
5 Work of the devil or social benefit?
6 Financial structure in the 21st century
7 Shifts of power
8 Crystal ball gazing