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The International Monetary System II

Dr. Antony Mueller

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1984

Fragilities emerge in the international financial system

Bailout of banks in US US Savings and Loan (S&Ls) crisis Rising US budget deficits Rising US current account deficits

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1985

Deterioration of International debt crisis

Dollar continues to rise September 22: The “Plaza Accord”

agreement to bring down the US dollar

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1986

Oil prices begin decline US and Japan agree on plan to

stabilize Yen-Dollar exchange rate

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1987

1987, January: intervention to hold the dollar decline

February 20: Brazil declares moratorium on its external debt

February 22: “Louvre Accord” aimed at strengthening the dollar

Extreme dollar weakness

Bond crash in US

October 19: Global stock market crash

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1989

March: Brady Plan to alleviate developing countries external debt situation

November 9: Fall of Berlin Wall December 17: Japanese central

banks initiates restrictive monetary policy in order to tame the boom in the stock market and in real estate

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1990

US Banking crisis July 1: German economic and monetary

union August 2: Start of first Gulf war Run on banks in US 35 large US banks close to bankruptcy October 3: Official reunification of Germany October 6: UK joins the European exchange

rate mechanisms November: US Citibank implements its

“survival strategy”

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1991

Dollar reaches new low of 1.45 DM February 27: end of first gulf war

Global rise of stock market US economy enters long upswing December 16: US interest rates

reach new lows since the 1960s

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1992

Banking crisis in Japan Nikkei falls to 14,309 points (after

almost 40 000 at the top) September: George Soros blows the

British Pound out of the ERM