Euro-currency Markets and their Control

Abstract

A substantial proportion of international capital movements takes place through the euro-currency markets, and from time to time policy-makers contemplate direct policy measures to limit the role and power of the markets to contribute to international capital movements. Such measures envisage restricting the institutions which create the markets rather than altering the fundamental forces making for international capital transfers. Implicit in the argument must be the notion that the markets add to the volume of world credit and capital movements compared with what would be the case if the markets did not exist. If, on the other hand, the euro-currency markets are simply alternative mechanisms or channels for credit creation and capital movements that would occur in some other way, control of the markets would have little rationale.