Currency wars dominated the policy conversation when the finance ministers of the Group of 20 leading nations gathered last month in Moscow. This crowded out talk of another threat to recovery and growth: the Balkanisation of the global financial system.

For three decades, there was a seemingly unstoppable increase in capital mobility and integration. But the 2008 crisis halted that abruptly. Cross-border flows collapsed and remain 60 per cent below their peak.

A large factor in this drop is the dramatic reversal of European financial integration. Nations once in the vanguard are turning inward. Having expanded across borders with the creation of the single currency, eurozone banks have reduced cross-border lending within the eurozone by $2.8tn since the end of 2007. Other types of cross-border investment in Europe have fallen by more than half. Capital flows have declined sharply in other advanced economies, too.