Among the main developments:
- A new pattern of current account balances is emerging, in part reflecting changes in competitiveness: in particular, the positions of Japan and West Germany have improved sharply.
- Financing problems have been exacerbated by high US interest rates and the strong dollar. In many countries, short-term interest rates have been raised and reserves run down.
- There was some slowdown in international banking activity in the first quarter of the year, and information on the London market suggests that there was little growth also in the second quarter.
- The international bond market was buoyant in the second quarter. Despite high and volatile US interest rates, dollar-denominated issues have accounted for about half of the total.
- The foreign exchange markets have been very active with interest rate considerations still dominant. The dollar continued to strengthen, while sterling fell sharply in early June although it later stabilised in nervous markets.