Why is a financial security called a « security » ?

Last week, the Stockholm Conference Center hosted the 7th Pan European Conference on International Relations, to this time the largest International Relations Conference ever organized in Europe. The general topic was : « Politics in Hard Times: International Relations Responses to the Financial Crisis »

There, I had the opportunity to listen to Pierre-Charles Pradier (Univ. Paris I – SAMM) and Katia Béguin’s (Univ. Paris I – IDHE) presentation about the « Rentes sur l’Hôtel de Ville de Paris ». These were not « bonds » in the modern sense of the word, but transferable « perpetuities ». Due to a mild interpretation of Church laws prohibiting usury, perpetuities allowed the asset bearers to receive annual coupons without the right of calling for repayment. I was very much interested in the model that Pradier and Béguin provided for understanding seventeenth century French history through the relationships between social groups of holders of such perpetuities competing for payments by the state.

Then I heard Marieke de Goede (Univ. Amsterdam) on the involvement of financial institutions in the fight against terrorism. She emphasized the way in which financial data are used in order to track possible terrorists. State agencies require financial institutions to send them any data pointing to suspicious financial behaviour, in the name of what she calls « speculative security ».

My discovery of the « perpetuity » asset class and the collision of meanings in the word « security » (financial asset or safety) raised a question that I hope someone can answer. Why are bonds, stocks, derivative contracts and so on, called « securities » in English, while, for example, the French put them under the category of « titres financiers »? I will be very glad to hear anyone who has an idea about the origin of the word « security ».

Pierre de Larminat. 15 sept. 2010

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