Abstract
What can economists say on the issue of the risks to the stability of the international financial system? Though well supplied with aggregate data on international lending, country debt and so on, they are unfamiliar with the microeconomic facts of individual banks, which are more relevant for assessing the stability and resilience of the system. Above all, they feel that in these matters conventions are at least as important as economic criteria: conventions being in turn shaped by the actual or presumed attitude of the authorities, they sense a powerful intrusion of political elements amongst the factors determining the course of events. Will a large debtor country ever be pushed to the point where it cannot but default? Or, for that matter, will a large bank engaged in international transactions ever be allowed to default? How one fares between gloom and unguarded complacency very much depends on the (non-economic) answers to these questions.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
See, amongst others, Charles S. Ganoe, “Loans to LDCs: Five Myths”, in M.G. Franko, M.J. Seiber (eds.), Developing Country Debt, 1979; Robert Solomon, “A Perspective on the Debt of Developing Countries”, Brookings Papers on Economic Activity, 1977, 1; and “The Debt of Developing Countries: Another Look”, ibid., 1981, 2; Jeffrey D. Sachs, “The Current Account and Macroeconomic Adjustment in the 1970s”, Brookings Papers on Economic Activity, 1981, 2.
The expression is by Jacob Viner (who was indeed impressed), quoted by Evsey D. Domar, “The Effect of Foreign Investment on the Balance of Payments”, The American Economic Review, December 1950, repr. in Evsey D. Domar, Essays in the Theory of Economic Growth, 1957.
Communist bloc debt and world banking tensions, International Currency Review, March 1982, p. 24.
LDC Liquidity Levels — How Serious is the Decline?, The Amex Bank Review, 1982, 2, and F.X. Colaço, Capital Requirements in Economic Development: The Decade Ahead, mimeo., October 1981.
External Indebtedness of Developing Countries, International Monetary Fund, Occasional Paper, 3, May 1981.
See “LDC Debt Service Burden: A Cash Flow Analysis”, The Amex Bank Review, 1982, 4.
J.P. Hayes, “Long-Run Growth and Debt Servicing Problems: Projections of Debt Servicing Burden and the Conditions of Debt Failure”, in Dragoslav Avramovic et al., Economic Growth and External Debt, 1964; Robert Solomon, “A Perspective…”, cit., note 1. See also “External Indebtedness…”, cit., note 6, appendix 3.
See Thomas J. Sargent, Neil Wallace, “Some Unpleasant Monetarist Arithmetic”, Federal Reserve Bank of Minneapolis Quarterly Review, Fall 1981.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1983 Martinus Nijhoff Publishers, The Hague
About this chapter
Cite this chapter
Spaventa, L. (1983). Risks to the Stability of the International Financial System: Gloom without Drama. In: Fair, D.E., Bertrand, R. (eds) International Lending in a Fragile World Economy. Financial and Monetary Policy Studies, vol 7. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-6824-0_18
Download citation
DOI: https://doi.org/10.1007/978-94-009-6824-0_18
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-009-6826-4
Online ISBN: 978-94-009-6824-0
eBook Packages: Springer Book Archive