This article argues that the crisis in euro area government bond markets reflects the same kind of stability challenges financial intermediaries face when confronted with a negative macroeconomic shock without having access to a lender of last resort. Nineteenth-century US banks operated under such a framework and used clearing houses in times of crisis as a co-insurance mechanism against contagious runs. Their experience provides valuable lessons for the ongoing reform efforts in the euro area. The analysis reveals that most of the instruments clearing houses used in the joint production of confidence are similar to the ones euro area governments have recently decided upon, such as the establishment of the European Financial Stability Facility. This suggests that the euro area crisis response has followed best private-sector practices of crisis management. However, inherent fragilities of co-insurance mechanisms as well as the long maturity and elusive quality of government debt present a challenge in designing a sustainable solution to the crisis without compromising on the original goal of euro area governance: ensuring sound fiscal policies as a prerequisite for maintaining price stability. To meet this challenge a substantially more comprehensive economic and political union might be needed.

In this article, we calculate a market-weighted return index for the 20 largest stocks listed on the Brussels Stock Exchange over the period 1833–2005, based on a new, unique and high-quality database. We find that this index captures the most important stylised facts of the value-weighted return of all shares listed on the Brussels Stock Exchange in this period. Our results support the empirical practice of concentrating on just the largest stocks. The indices we construct are based on one of the longest Belgian time series available. The indices take into account the exact dividends, the timing of the dividend cash flows and all capital operations. We are therefore able to decompose total returns into capital gain returns and dividend returns, which is not possible with most historical return series. We show that, to construct a credible return index, it is crucial to fully take into account dividends.

The decline of interest rates during the early modern period is considered an important factor in the subsequent rise of capitalist society. This article uses unique empirical material based on bills of exchange in Stockholm between 1660 and 1685 to estimate underlying ‘shadow interest rates’. It shows that annual rates ‘according’ to Stockholm were very high, mostly above 10 per cent, an indication of underdeveloped financial integration between Stockholm and the main European centres. There are also indications of a decline in these rates during the period studied, reflecting improved efficiency in Swedish financial markets.

We identify the timing of currency, banking crises and sudden stops in New Zealand from 1880 to 2008 using methodologies from the international literature and consider the extent to which the empirical models in that literature can explain New Zealand's crisis history. We find that the cross-country evidence on the determinants of crises fits New Zealand experience reasonably well. A number of the risk factors that correlate with crises internationally – such as domestic imbalances, external debt, and currency mismatches – were elevated for New Zealand when the country had more frequent crises and have improved in the recent (more stable) period. However, a time-series analysis of New Zealand growth over 120 years shows that global factors – such as the US growth rate and terms of trade – explain New Zealand growth fairly well, and that crisis-dummy variables do not have substantial additional explanatory power. This suggests that having sound institutions and policies may help avoid severe domestic crises, but will not be sufficient to avoid the domestic economic impact of the global business cycle.