Developments in international banking and capital markets in 1985

Quarterly Bulletin 1986 Q1
Published on 01 March 1986

This article continues the annual series on international banking developments expanded, as last year, to encompass wider capital market developments.

  • Much of the year's international financial flows was between investors and borrowers in developed countries and was channelled through securities markets. International bank lending fell further from its pre-eminent position seen in the 1970s.
  • Financial innovation continued apace and included the establishment of new markets for short-term paper, while controls were relaxed in the major capital markets. Together these forces contributed to a growing integration of markets.
  • In October US Treasury Secretary Baker launched an initiative for tackling the debt problems of certain developing countries. The proposals provide a framework based on growth-oriented adjustment policies and have been broadly welcomed, although discussions on implementation continue.

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