Macroeconomic Concerns

Abstract

Hitherto the analysis has been preoccupied with explaining the parameters and responses by agents which affect the operations of the Euro-currency system, and little has been said about the implications of the system for the rest of the world. Chapter 6 examined some of the beneficial consequences (and costs) of credit intermediation by the market for the world economy. In fact, ever since the Euro-market emerged there has been considerable debate about its impact on world economic stability. The concerns raised in this debate derive largely from the following observations:

• 1. The market is not subject to direct regulation for monetary control purposes.

• 2. The institutions involved in the market are mainly branches and subsidiaries of banks. In their own domestic markets banks are normally regulated for monetary control purposes and are re-garded as playing an especially important role in national monetary systems.

• 3. The rather visible and efficient nature of the Euro-market as a channel for international capital and banking flows.