Abstract

The Development of the Euro Money and Capital Markets since 1973

The development of the Euro money and capital markets since 1973 has been determined by the worldwide introduction of flexible exchange rates (March 1973), the world economic recession in 1974/75, the reduction of restrietions on capital movements and, above all, the oil crisis and its consequences for the international balance-of-payments situation. In the meanwhile, the volume of the Euro-markets has increased incessantly, though not so rapidly as at the beginning of the seventies, and in 1976 reached an order of magnitude of about 300,000 mill. dollars (money markets) and 60,000 mill. dollars (capital market) respectively. The chief problem at present is whether “private” financing of balances of payments via the Euromarkets can be sustained at the current level, even thoush this was initially regarded as a stabilizing factor in the world economy. For the structure of payments on current account will tend - presumably - for a long time to come towards substantial imbalances between OPEC and OECD countries, among OECD countries and vis-ä-vis oil-importing developing countries. “Private” balance-of-payments financing should therefore be replaced, because it is granted without imposing economic policy obligations, by financing through international organizations (IMF). Better mutual adjustment of current accounts seems desirable, though substantial difficulties would, of course, have to be overcome.