EconPapers    
Economics at your fingertips  
 

Cables, Sharks and Servers: Technology and the Geography of the Foreign Exchange Market

Barry Eichengreen (), Romain Lafarguette and Arnaud Mehl ()

No 21884, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the impact of technology on the production and trade in services, focusing on the location of foreign exchange transactions and the effect of submarine fiber-optic cable connections. Cable connections between local markets and major financial centers reduce the costs of trading currencies locally and increase the share of currency transactions taking place in the issuing country. But they also attenuate the effect of existing spatial frictions that prevent transactions from moving offshore to take advantage of agglomeration economies and thick-market advantages of major financial centers. In practice, this second effect dominates. Our estimates suggest that the advent of cable connections boosted the share in global turnover of London, the world’s largest trading venue, by as much as one-third.

JEL-codes: F30 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-opm
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://www.nber.org/papers/w21884.pdf (application/pdf)

Related works:
Working Paper: Cables, Sharks and Servers: Technology and the Geography of the Foreign Exchange Market (2016) Downloads
Working Paper: Cables, Sharks and Servers: Technology and the Geography of the Foreign Exchange Market (2016) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:21884

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w21884

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-10-24
Handle: RePEc:nbr:nberwo:21884