The Breaking Upheaval: How the Entente Banking System was challenged by WWI

The breaking point of the 'cosmopolitan' bankers’ era came in the aftermath of the assassination of the Austro-Hungarian empire’s Archduke, Franz Ferdinand, on 28 June 1914 . Following this event, European countries abandoned the Gold standard and the ‘Most Favoured Nation’ system. London’s financial hub experienced a severe crisis, with British authorities closing and seizing branches of German banks in the City. The Parisian financial centre seemed considerably weakened at the end of the war, while New York began its ascent as capital of capital (Cassis 2006). At the same time, World War I witnessed cooperation among the central banks of the participating alliances, particularly those within the Entente, and intensified the relationship between the treasuries and the central banks in all the countries involved. Scholarly literature has explored various aspects of the financial shock of the Great War, from its immediate discontinuities and economic challenges during the conversion from wartime economy (Kindleberger, Aliber 2011; Lopez, Mitchener 2021) to its long-term continuities (Eichengreen 1992; Smith , Mollant, Tennent 2017). Our panel aims to provide a multifaceted framework for understanding the profound and far-reaching consequences of WWI on the European banking system, with a particular focus on the countries of the Entente. Our analysis will include both the examination of central banks and the private banking system in three countries (Italy, UK, and France). We want to raise research questions still overlooked in the scholarly debate, namely, how can we assess the central bank cooperation throughout and after the war? To what extent did the war reshape the managerial elite of the private banking sector? How did the war precipitate the transition of financial systems from a ‘market-based’ to a ‘bank-based’ model, and what were the underlying driving forces and consequences of this transformation? Additionally, how did the events surrounding WWI contribute to the transition of would-be central banks from shareholder-owned institutions to nationally owned bodies, and what were the implications for their role in financing businesses and the national government? In conclusion, the cross-national and multilayered perspective of the panel endeavours to present fresh and ongoing research on central banking and the banking sector, fostering a comprehensive understanding of how World War One fundamentally transformed the European banking system, from the disruption of the pre-war financial order to the evolution of central bank–government relations.