Introduction: Financial Deregulation and Technological Change

The derivatives revolution, and the exponential growth of the trading of complex financial instruments in exchanges and over-the-counter in the 1990s, have significantly altered the technological image of finance. Financial engineering, trading technologies and telecommunication backbones of electronic financial networks are now defining many people’s perception of the use of information technologies in banks and in the wider financial sector (Bodie 1999). The former Chairman of the Federal Reserve, Alan Greenspan, one of the main figures of the modern capitalist era of rapid globalization and securitization, adopts a similar view. In his words, ‘information technology has made possible the creation, valuation, and exchange of complex financial products on a global basis heretofore envisioned only in our textbooks. […] Derivatives are obviously the most evident of the many products that technology has inspired. […] Calculation capabilities has permitted […] new ways to unbundle risk’ (Greenspan 2000: 109). Yet this focus on ‘building systems that model, value, and process financial products such as bonds, stocks, contracts, and money’, as we can read in a textbook on financial technologies (Freedman 2006: 1), produces a one-sided perspective. Operational complexities, originating in the evolution of banking institutions offering utilities to a wide range of enterprises and households since the late nineteenth century, have shaped the technological landscape in the long term, and in a much stronger sense.