Scandinavia, Iberia, Austria and Italy

This chapter is concerned with the countries of Europe which are least active as financial centres. There is a very limited use of their currencies for international commerce and finance, and by and large they are not capital exporters on a systematic basis. Nor is there much foreign investment in the domestic financial markets. The main link between these countries and the international financial market is their need for it as a means of helping with their adjustment processes in the recent more difficult and varied economic times. In the case of Italy a further link exists, for the euromarkets have been very important for the Italian banking system. Foreign currency liabilities amount to over $22bn, and are employed largely in lending overseas, but also somewhat — $6bn — to residents. In line with their widely varying economic structures the adjustment problems of these countries have differed greatly. The Scandinavian countries have had an exceptionally high standard of living based on very efficient production of a limited range of manufactured goods, a strong position in agriculture, resource endowment in forest and other products and, in some cases, a traditional strength in world-wide industries, such as shipping. Many of these industries have faced extremely severe cyclical or structural problems, reflecting the changing conditions in the world economy.