A closer look
In 1974, German regulators shut down Herstatt Bank at the end of the German workday. There was just one tiny, world-breaking problem: New York was still wide awake. Herstatt had taken massive Deutsche Mark payments from global banks earlier in the day, but because of the time zone lag, it got shut down before it could send the US Dollars back. Counterparties were left staring at empty ledgers, instantly freezing global foreign exchange markets out of pure terror. The entire disaster proved that the international banking system was essentially a chaotic trust exercise vulnerable to a clock.
