Structural Change of International Capital Market Flows in a Historical Perspective

  • Ikuya Fukamachi


Over the course of this decade, the international financial system faced shuddering shocks from the external debt problem of developing countries. According to the World Bank estimate, their external debt amounted to over 1 trillion dollars by the end of 1986. I should mention here that the accumulating process of external debt of developing countries is closely connected with the international banking activities which were carried on in Eurocurrency markets from the late 1970s to the early 1980s, and the debt problem is inseparably interwoven with a structural change of international fund flow in today’s world financial markets. The net external debt position of the US most symbolically indicates a change of international fund flows. The US, whose currency the dollar has been a unique international key currency over the decades after the Second World War, changed its net international investment position to a negative figure of 107 billion dollars during 1985.1 Until recently, the external debt problem has been discussed only as a matter between the lending creditor banking concerns and debtor countries. This attitude was derived from the practical needs of banking business management: how to evade the country risk; how to treat demands of rescheduling from debtor countries; and how to restructure banking balance sheets. Certainly, these practical prescriptions are very urgent and important, but there remains a wider area to be studied on the relation between indebtedness and the system of international financing. In other words, the international financial system is the basic framework where international banks have lent money and the indebtedness of LDCs has overgrown.


Capital Inflow Monetary Authority External Debt Security Investment Interbank Market 
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  1. 2.
    Regarding the detail of working and functions of the US dollar as an international money, see Ikuya Fukamachi, Gendai-Shihonshugi to Kokusaitsuka Contemporary Capitalism and International Money, Tokyo, The Iwanami Publishing Co., 1981;Google Scholar
  2. regarding the historical development of the pound sterling as an international money, see Fred Hirsch, Money International, Penguin, 1967.Google Scholar
  3. 5.
    Samuel Brittan, ‘The New World Dollar Standard’, Financial Times, 10 December 1981.Google Scholar
  4. 6.
    Kenzo Takaizawa ‘Bei-tokyoku ni yoru kawase shijo sosa (The Exchange Market Operations by the US monetary authority)’, Bank of Tokyo Geppo, May 1979, pp. 5, 17 (original source: Federal Reserve Bulletin).Google Scholar
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    Group of Thirty, The Foreign Exchange Markets under Floating Rates, 1980, pp. 13–17.Google Scholar
  6. 8.
    Group of Thirty, The Foreign Exchange Market in the 1980s — The Views of Market Participation, 1985, p. 11.Google Scholar
  7. 9.
    See the above-cited brochures by Group of Thirty; regarding the US Exchange Market, see Patricia A. Revey, ‘Evolution and Growth of the United States Foreign Market’, Quarterly Review, Federal Reserve Bank of New York, Autumn 1981, p. 34.Google Scholar

Copyright information

© H. W. Singer and Soumitra Sharma 1989

Authors and Affiliations

  • Ikuya Fukamachi

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