Professor Bell said, "I am delighted that our application to Leverhulme has been successful in this intensively competitive funding environment.

"This project will build on our previous successful research funded by the ESRC into the medieval wool market and medieval sovereign borrowing and credit crises, and will cement our position as world leaders in the historical analysis of financial markets and in drawing policy-relevant lessons from the medieval environment for contemporary problems."

"In our previous projects, we showed that contrary to popular misconception, the medieval financial markets were remarkably efficient and well functioning centuries prior to the advent of computer-based asset pricing models. It will be interesting to investigate whether the same is true of the currency markets, which were even at that time the most developed aspect of the financial system."

The study will adopt the tools and techniques of modern finance to analyse the market for foreign exchange that existed in the later Middle Ages. The 3-year project will be the first to systematically study both the short- and long-run determinants of medieval foreign currency rates. It will examine how medieval merchant societies, the forerunners of modern investment banks, sought to profit from speculating on exchange rate fluctuations. It also aims to investigate how successful medieval governments were in their attempts to control exchange rates, an issue clearly of relevance in today's markets where there is again talk of central bank intervention in the FX markets and the possibility of competitive devaluations.

[1] Medieval Foreign Exchange c. 1300 - 1500, Grant number RPG-193.