Monumentum aere perennius – a monument more lasting than bronze. That is probably the last piece of Latin readers of Euromoney will have to endure outside the legal page – just one, small difference between the worlds of 1969 and 1999. When Euromoney was founded in June of that year, every senior banker in London, certainly, and probably Frankfurt, Paris and Milan too would have read the works of Horace – the poet who believed his work would last longer than the statues of Rome’s dignitaries.
The international capital markets are one such monument. Long after their creators are gone, the ideas they promoted – deregulation, the free movement of capital, faith in the market’s ability to match buyers and sellers better than governments – will live on. Even at the markets’ birth their founders realized that what they were suggesting had more profound implications than simply the invention of a few novel pieces of paper.
As reported in the first edition of Euromoney, at the inaugural meeting of the Association of International Bond Dealers (now ISMA), Robert Genillard of White Weld made an impassioned plea for governments to look beyond nationalism in their reactions to the Eurobond market, arguing: “The future of the Western world in an era of constantly growing economic interdependence and instant communications lies in accepting multinational finance.”
As the markets developed – and Euromoney with them – we have witnessed an explosion of innovation that would have stunned Genillard. Our journal was there at the birth of modern financial instruments; it reported on some of the first swap and option transactions; it described the first bought deal, floating-rate note, fixed-price reoffer, medium-term note and many more besides.
At the same time it has chronicled the rise, the fall – and in some cases the rise again – of the institutions that have done most to push the markets forward: White Weld, NM Rothschild, SG Warburg, Morgan & Cie; and later, Credit Suisse First Boston, Goldman Sachs and Merrill Lynch.
Today, looking back over 30 years of achievement – much of it synthesized in this anniversary issue – capital markets practitioners past and present can be justifiably proud of their accomplishments. But before they grow too confident that the monument they have built will truly endure, they should ponder the remarks of the thinkers whose views and reminiscences we have gathered in this edition.
HSBC’s John Bond points out that for all the talk of the globalization, most banks have retreated into their domestic markets; Paribas’ André Levy-Lang challenges the current orthodoxy, that favours consumer over investment banking, as just a fad; Angel Corcóstegui of BSCH points out how quickly Latin American countries have swung from economic chaos to paying lip service to Maastricht fiscal principles. How soon might they swing back?
In the same sceptical vein, executive editor Brian Caplen illustrates the gap between perception of capitalism’s advances and reality. Governments have not shrunk, regulation has become more pervasive, free markets do not flourish if left to their own devices.
In other words, it may be tempting to believe that the capital markets are secure, that their worth is self-evident, that history is on their side, but 30 years after the first Eurodollar FRN, Euromoney is not so sure.
Governments tend not to learn. Europe under both right- and left-wing governments has consistently failed to deliver US levels of job creation and GDP growth. European banks and companies struggle to make the top of rankings. As a senior European politician recently admitted to Euromoney as he poured scorn on the level of debate at ministerial meetings, this has been one of the region’s most shameful failures.
Yet, ignoring Genillard’s plea, a socialist Europe sets itself against US-style reforms and sees its new currency as a way of closing its markets to the US. Bent on harmonization – disguised regulation – it has set its sights on the offshore bond markets. European governments acting through entities such as Deutsche Telekom and Caixa Geral even contemplate renationalization via acquisition.
It is easy to forget how far we have come from the days when the US and UK markets – the biggest that then existed – were closed to foreign issuers; when pocket money was all the foreign exchange you could take abroad; when governments dictated whether a bank could underwrite a bond.
Governments relaxed the rules; they can reinstate them. Unless you, the market’s guardians today, ensure that your voice is heard when politicians look to turn back the clock, your markets will be under threat.
As it has done for the last 30 years, Euromoney will add its voice to the calls for greater transparency, lighter and better regulation and we will continue to champion the cause of these extraordinary creations – the international debt and equity markets.
