Non-Debt-Creating Transfers of Financial Resources during the 1990s: The Case of Mexico
International finance is in a period of transition following a host of critical events during the 1980s, such as the Third World debt problem, the savings and loan collapse in the US, the leveraging of corporations, the advent of regular and coordinated intervention in the currency markets by the G-7, the prospect of currency integration in the EC, the incipient transformation from socialist to market economies in Eastern Europe and the consequent demand for Western resources, as well as a variety of smaller, yet in the aggregate, significant developments in the financial markets themselves. All of this adds up to a very different economic environment in the 1990s from the one that prevailed in the 1980s. Perhaps the most critical change will be the atomisation of both risk and investment decisions, with equity flows playing a bigger role than during the 1980s. We are already witnessing the fact that sovereign lending is again the domain of international bond markets rather than commercial banks.
KeywordsReal Interest Rate Structural Reform External Debt International Capital Market Framework Agreement
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