Financial strains in the world economy
DOI:
https://doi.org/10.13133/2037-3643/10769Keywords:
Debt, international banking system, balance of payments, supervision, stabilityAbstract
During 1982 increasing strains have emerged in the financing of external deficits, and important sovereign borrowers, no longer able to meet their debt service commitments, have sought a rescheduling of their foreign debt. At the same time the international banking system has reduced its lending for balance of payments financing. To understand these developments and the policy measures required to maintain international financial stability, the present work examines the effects of the two successive oil shocks on the world economy and assesses the impact of these factors on banks’ balance sheets and operations. The author discusses the functions of banking supervision in promoting the stability of the system and examines the contribution that policy action can make, at the national and world levels, to strengthen the structure of international financing relationships.
JEL: F32, F34