The International Monetary System in the (Very) Long Run

The international financial system evolved out of the need for trade settlement and trade credit as early as 4000 BCE. Then, from the late thirteenth century, the capital account, beginning with foreign sovereign lending, contributed increasingly to international financial flows. We review the state of research on the history of international finance. We conclude that the dominance of capital flows is likely to continue despite recent setbacks driven by state intervention and geopolitics.