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The Recycling of Petrodollars

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  • Christopher Kopper

Abstract

[eng] The trading market for the petrodollar revenues emerged before the first oil price crisis, but did not blossom before the quadrupling of the oil price between 1973 to 1974. The little taxed and unregulated market for dollar deposits, bonds and loans at London, the most prominent finance place in Europe, proved to be the perfect institution for the recycling of the OPEC countries payment surplus. The Eurodollar market in London channelled their short-term surpluses back to the oil importing nations and boosted the long-term loan market for the developing nations. In the 1970s, long-term loans to developing countries became a popular outlet for the banks' liquidity surplus. But OPEC's dropping payment surplus, high interest policies in the US and threatening liquidity gaps in the commercial banking sector prompted the recall of loans which brought the debtors to the edge of illiquidity. . JEL Classification : F30, O16

Suggested Citation

  • Christopher Kopper, 2009. "The Recycling of Petrodollars," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 37-46.
    • Handle: RePEc:prs:recofi:ecofi_1767-4603_2009_hos_9_1_5489
    DOI: 10.3406/ecofi.2009.5489
    Note: DOI:10.3406/ecofi.2009.5489
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    Cited by:

    1. Johannes Pfeiffer, 2017. "Fossil Resources and Climate Change – The Green Paradox and Resource Market Power Revisited in General Equilibrium," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 77.

    More about this item

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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