Medieval Foreign Exchange c. 1300 1500

Professor Adrian Bell, Professor Chris Brooks and Dr Tony Moore - research Medieval foreign exchangeThe Leverhulme Trust has recently awarded a Research Project Grant worth almost £200,000 to Professors Adrian Bell and Chris Brooks, working with Dr Tony Moore, to examine in detail the workings of the foreign exchange markets in fourteenth- and fifteenth-century Europe. This will be the first project to systematically study both the short- and long-run determinants of medieval foreign currency rates using modern methods and theories. The project started in January 2012 and will run for three years.


The 'Medieval FX' project is a follow-up to a previous collaboration, 'Credit finance in the middle ages: loans to the English crown c.1272-1340'. It aims to use the tools and techniques of modern finance to analyse the market for foreign exchange that existed in the later Middle Ages.

Modern FX traders seek to predict changes in exchange rates, whether based on economic and political fundamentals or technical analysis. Medieval merchants were concerned with the same questions, and their letters and handbooks comment on periods of strettezza ('tightness') and larghezza ('slackness') in the money markets and provide advice on how to anticipate these changes. Within the modern finance literature, extensive theoretical and empirical work has been conducted on the determination of exchange rates. We will test whether theories such as Purchasing Power Parity or the uncovered Interest parity can be applied to the medieval FX market.

FX trading was at the heart of the business model of the medieval merchant societies, comprising over half of the total business of the fifteenth-century Italian banking company of the Borromei of Bruges. It remains central to the activities of major banks today, producing almost half of the trading revenues of US commercial banks in the first quarter of 2010. The project will examine how medieval merchants sought to profit from speculating on exchange rate fluctuations. It will also consider whether exchange rates were manipulated to hide interest charges and circumvent the usury prohibition and, if so, whether we can calculate interest rates from exchange rate spreads.

The project will also investigate how medieval governments sought to control flows of capital and bullion across their borders, and the impact of these policies on exchange rates. This has considerable contemporary relevance, when central banks are again intervening in the FX markets and the possibility of competitive devaluations.


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Professor Annalisa Marzano

Centre Director


Dr Tony Moore

MA Programme Director


Amanda Harvey

Postgraduate Administrator: 


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