In part because of shortage of finance, the current account deficits of developing countries have been much reduced this year. Oil exporting countries are in approximate balance on current account (and have drawn down assets, and there has been a movement towards balance in some OECD countries-the United States, in growing deficit, being a notable exception. These developments have been accompanied by much lower activity in international financial markets, especially in syndicated bank credits {other than in business arising from debt restructurings). The decline in activity is evident in the international business of banks in the United Kingdom and in the BIS reporting area more generally. Activity in the international bond and floating rate note markets has been less affected.
Sterling has eased on balance in the foreign exchange market. After hints of weakness in the early autumn, the dollar has regained ground. The EMS has been generally calm.
International financial developments