How the Euromarket fends off global financial disaster. [Successfully recycles OPEC's surplus money]

Journal Article · Mon Sep 24 04:00:00 EDT 1979 · Fortune; (United States)

OSTI ID:6023604

Meadows, E

When OPEC petrodollars accumulated in large sums in 1974, the big banks in the Euromarket were able to attract the deposits and used the funds to help finance loans to countries facing rising deficits, thus avoiding a global financial disaster. It is feared that a financial disaster may occur following the recent oil price increases, but the article explains the workings of the Euromarket to put aside such fears. Eurocurrency lies uniquely beyond the control of any nation, mostly in the hands of the world's biggest banks, free from reserve requirements and other regulatory burdens imposed by national authorities. The market offers depositors higher interest rates than those available elsewhere in the non-Communist world, and often provides loans at rates lower than those obtainable anywhere else. It is a safe place for oil sheikhs to deposit cash until needed. Some twenty large banks ruled the market in the early 1970's, but more than 200 banks are now involved, which spreads the lending risks. The bankers who operate in the market have become more sophisticated since they have shed some old prejudices against lending to poorer countries. The unfettered competition of the world's foremost unregulated financial marketplace is serving mankind's common interest by efficiently moving money from those who have it to those who need it. Presently, the Euromarket is redistributing wealth by recyclig the excesss dollars that pile up unspent in OPEC bins in great part because of US oil imports. It is largely the US oil dependence that gives OPEC the leverage to set petroleum prices that impoverish the rest of the world. (MCW)

• OSTI ID: 6023604
• Journal Information: Fortune; (United States), Journal Name: Fortune; (United States) Vol. 100:6; ISSN FORTA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
CAPITAL
COMPETITION
DEVELOPING COUNTRIES
ECONOMICS
EUROMARKET
FINANCING
GLOBAL ASPECTS
GRANTS
INDUSTRY
INTERNATIONAL COOPERATION
INTERNATIONAL ORGANIZATIONS
MARKET
MIDDLE EAST
OIL-EXPORTING COUNTRIES
OPEC
PETROLEUM INDUSTRY
PROFITS
REGULATIONS
RESERVES
RESOURCES
RISK ASSESSMENT
TRADE