This article continues the annual series on developments in international banking and capital markets. The article has a short overview, followed by sections on developments in international banking and capital markets. There is a feature on mortgage-backed securities.
- There was a slowdown in the rate of growth of international banking business in 1988.
- Banks in Japan continued to dominate international banking business, though Japanese banks in London have not increased their share of business there any further. Both the yen and the dollar were less important in international lending flows in 1988 than in 1987.
- Primary activity in international capital markets was buoyant, reflecting the strength of investment in industrial countries, the continuing surge in mergers and the strong issuance of equity-related bonds by Japanese borrowers.
Competition among intermediaries remained intense, as reflected in low profit margins despite the boom in issuance. Tighter regulation is claimed to have raised costs.