The Governor gives a wider review of the international scene. Among the points he makes are:
- The second oil shock forced on us restrictive measures to bring inflation under control. These played a part in bringing growth to a standstill-as did other factors which have been at work for a long time.
- We have now begun to enter a new phase. Good progress has been made in reducing inflation. The costs of counter-inflationary policies will not now be as great because continued progress will allow more scope for countering depressive influences.
- Few other single developments would be so helpful for world recovery as a further substantial fall in interest rates in the United States.
- In this country, bank lending provides an essential support to the economy, which monetary policy must seek to accommodate.
- Developing countries' debts were created in a less depressed world. A necessary process of adjustment is under way by the countries concerned-and by the banks who lent to them. It is important that we confront that problem with good sense on all sides.
- The volatility of exchange rates has been inimical to growth. The commitment of governments to strengthen the IMF in exchange rate surveillance needs to be made a reality.
- The international financial institutions' share in financing will need to increase, and they must have sufficiently large resources to meet that.