International Social Science Journal (Chinese Edition)

No.1, 2017

Financial “deglobalization”?: capital flows, banks, and the Beatles

(Abstract)

Kristin Forbes

This is the speech the author delivered at Queen Mary University, London, on November 18, 2014. The author offers comments on four questions. First, is there broader evidence of financial deglobalization – especially in the United Kingdom? Her answer is yes. Second, what is driving this trend? She shows that a massive contraction in global bank flows is the culprit, and this is particularly important for the UK. Third, what is driving these changes in international capital flows – especially bank flows? International bank flows no longer appear to respond to similar drivers as before the crisis (namely global risk). Finally, what are the implications of this deglobalization in banking flows for the United Kingdom and monetary policy? A number of considerations – some of which could be substantive – such as affecting how vulnerable the UK is to different types of shocks and making monetary policy more effective.