Markets function only through the transmission of information-both good and bad. It used to be that the fast horse, the clipper ship, or Mister Reuter's land telegraph brought the news by which fortunes were made and lost. Today it is the electron. The speed with which the data travels is in order of magnitude different from any time in history, but the information is unchanged and two and two still make four at any speed.

The principles of sound banking are unchanged. If the world is to advance, the flow of data must move across borders unimpeded. This conclusion about the freedom of transborder data flow is merely an extension of what we have learned as a world society about trade in goods.

The postwar boom that rebuilt all our economies was based on the enlightened proposition that goods should be permitted to cross national boundaries with as few restrictions as possible. This concept was institutionalized in such international bodies as the General Agreement on Tariffs and Trade, as well as in many national groupings.

Free trade, while regularly sabotaged and seldom fully realized, is usually given lip service as A Good Thing because it's based on the generally acceptable economic theory of comparative advantage. But when world economic conditions begin to deteriorate, protectionism rears its familiar head and nation after nation begins to raise tariff and nontariff barriers to international trade.

This is an old and recurring phenomenon. Today I would suggest we are seeing an equally dangerous trend that could destroy the premise upon which S.W.I.F.T. is based. I refer to the growing efforts to control the flow of data across national borders.

To us, the idea of setting up a toll-gate or customs post to restrict the entry of a stream of electrons may seem ludicrous. There are others who see it differently.

The beneficent results of low-cost, instantaneous international financial transactions, which we regard as a free market in ideas and information, are by no means appreciated in every quarter. We have seen laws passed to control transborder data flows, and more are over the horizon. Some have laudable purposes-such as protecting the privacy of individuals and businesses. Some have internal political motives, such as job protection or the desire to make full use of, and derive revenues from, the publicly owned postal-telegraph services. Some are viewed as preservation of national self-sufficiency, designed to avoid economic dependence on entities based in other countries. And some, whatever the stated motive, are based on free-floating anxiety about what information carried on the international electron stream might produce.

As governments intervene more actively to control the international flow of data and capital, we may be sure that another fruitful source of political conflict among governments will be opened up.

Governments-and all of us-must live with the fact that modern technology has welded us into an integrated economic and financial marketplace. The clock cannot be turned back. Perhaps we in the financial community have been remiss in not making this clearer to the world's opinion makers.

The immense Euro-market would never have gotten off the ground if it hadn't been born free-and stayed free. The electronic information revolution which helped make it possible has now soared far beyond that market. But it will surely falter if it becomes subjected to ever-increasing national regulatory wing-clipping. And the market will suffer along with it.

If it is true, as some schools of economics teach, that people act efficiently in their own interests, a good case can be made for the increase in the general welfare that results from the free flow of data. The case has three elements: price, security, and liability.