Money Matters: An IMF Exhibit -- The Importance of Global Cooperation

Reinventing the System (1972-1981)

Part 4 of 7

Conflict &
(1871 - 1944)

Destruction &
(1945 - 1958)
The System
in Crisis

(1959 - 1971)
the System
(1972 - 1981)
Debt &

(1981 - 1989)
Globalization and Integration
(1989 - 1999)

Recycling Petrodollars

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Borrowers' Market

The solution to one problem created another. Recycling petrodollars through the banking system slowed economic contraction, but did not alleviate massive payment imbalances. As a result the debts of oil-importing countries - especially developing countries - continued to pile up:

  • The foreign debts of 100 developing countries (excluding oil exporters) increased 150% between 1973 and 1977.

Could the economies of the debtors withstand the inflationary pressure of the sudden, enormous oil-price increase?

Without the discipline of a fixed standard, could the new floating-rate system cope with such massive trade and monetary imbalances?

"The international monetary system is facing its most difficult period since the 1930s."

H. Johannes Witteveen
Managing Director of the IMF
January 15, 1974


Recycling Petrodollars


Would Floating Rates
Sink the System?
OPEC Takes Center Stage Petrodollar Problem
Recycling Petrodollars Stagflation Rush from the Dollar War on Inflation

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