By 2007, they had reached zero – bliss point for global capital market integration. Yet bliss was short-lived. 2007 proved to be a high-water mark. The onset of the financial crisis has resulted in significant capital market retrenchment as nation states have returned money home, placed regulatory ring-fences around assets and imposed restrictions on capital movement. Today, global capital market integration is back to levels last seen in 2000 and is still falling. This retrenchment reflects nervousness about the dark side of globalisation, its fragility and contagious cost. And this nervousness is not confined to capital flows; it has affected flows of goods, services and people too. That is why the World Trade Organisation’s (WTO) latest round of negotiations has been on-going for nearly 12 years. And it is why policy debates about immigration restrictions in a great many advanced economies are so vexed. These are attempts to turn the tide or at least stem the flood. The costs of a significant retreat in flows of capital, goods, services and people are difficult to quantify. They are not, however, difficult to imagine. We need only look back to the aftermath of the First World War for a case study. Then, trade barriers were erected, capital flows restricted, immigration controls imposed. What followed was not a halcyon period for the global social, economic and financial order. 4  BIS central bankers’ speeches  Reversing the rising tide of information would be an even more Canute-like task.
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