ABSTRACT
Discussions on international debt often lack historical perspective or search for clear principles. It should be remembered that the heavy private bank involvement in Latin America largely replaced the bond buying by smaller private investors usual earlier in the century. In the 1970s the private banks, loaded with oil money and encouraged by their governments and central bankers, undertook the recycling of a great part of the oil funds. Commendable as the crisis efforts have been to deal with the consequences of these misguided actions, as yet there has been no acceptance by the governments of the advanced countries or their central banks of the principles which will have to be applied if we are to achieve the best outcome from these difficulties. The World Bank, the International Monetary Fund, and soft loans by governments are collective examples of this attempt to strengthen the financial and political hygiene of an increasingly liberal world economy.
