02 — FROM GOODS TO ORGANIZED MARKETS

As trade expanded, merchants needed better systems.

Instead of every person negotiating separately, trading became increasingly organized around marketplaces, merchant networks and financial instruments.

Over time, systems developed for:

• Credit

• Loans

• Bills of exchange

• Commodity contracts

• Merchant banking

• Currency exchange

International trade finance became increasingly organized through major European trading centres such as Antwerp, Amsterdam and London.

The important evolution

The market started moving from:

“I have wheat. You have money.”

toward:

“I can make an agreement today for something that will be delivered later.”

That idea eventually became extremely important to modern derivatives and futures markets.