Conclusion

The material presented in the earlier chapters has set out some of the main factual features of the economic and financial history of the period, the structures and developments, in particular, international financial markets, and the policy changes implemented by major countries in response to changing circumstances. Writing a book is nothing if not a learning process and most authors probably end up drawing conclusions which are not necessarily the ones they would have been able to come to at the beginning of their study. This has been no less the case in this instance. One of the main purposes in preparing the book in this manner — incorporating a survey of detailed information about financial markets and countries’ policies — was to shed light upon the ‘texture’ of changes in these financial markets. Many commentators have considered the global flows of funds between creditor and deficit countries, and it is a relatively commonplace observation that the international financial markets and the international banking system have acted as an effective channel for the flows of funds necessary to counter the serious balance of payments disequilibria of the 1970s. The converse of this unqualified approbation is to accept the contribution of the substantial flow of funds through the international banking system, but to regard this as fundamentally adverse in the sense of both incorporating excessively risky lending on too large a scale and of contributing to world-wide inflation and currency instability. Neither of these points of view should be dismissed completely out of hand, for no one would claim that every aspect of monetary development in recent years has been perfect. But after having examined in more detail the texture of changes in the international financial markets our underlying conclusion differs from both points of view.