Sovereign debt management and the globalization of finance: Recasting the City of London’s ‘Big Bang’

Abstract

This article focuses on the central position of sovereign debt securities in the financial system to challenge existing accounts about the 1986 ‘Big Bang’ deregulation of the City of London’s securities market. The reforms are often cast as an iconic moment of neoliberal deregulation and a key episode in the globalization of financial markets. Such accounts stress that the state played an active role in constructing the reforms and upholding the global market relations they produced, yet they remain unclear about the state’s direct interest in pursuing financial market liberalization. The article contends that domestic concerns over sovereign debt management were central to the state’s pursuit of regulatory change. The Big Bang reforms greatly expanded the size and liquidity of the market for British sovereign debt. This empowered the state, improving its capacity to conduct monetary policy and to raise finance on better terms. In doing so, the article demonstrates the necessity of examining sovereign debt management in order to specify the state’s role in the construction of financial globalization.

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