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m International capital markets are the group of closed

interconnected markets in which residents of different


countries trade assets such as currencies, stocks and bonds.
m ICM are also called as EURO-MARKETS.

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 Transfer of assets of erstwhile soviet union to Europe3 The
assets of the erstwhile soviet union detained in the USA at the
end of 1950s, which they feared would be frozen, were
brought back to London through Narodny Bank of Mascow
and to paris through the Commercial bank of East Europe.
@estrictive measures taken by the administration:
O Regulation  In 1960, the regulation µQ¶ in the USA fixed
ceiling on interest rates offered by American banks on term
deposits and prohibited them to remunerate the deposits whose
term was less than 30 days. Besides, at the end of 1960s, the
Federal Reserve Board reduced the growth of total monetary
mass. the money market rate went up. American banks
borrowed on the Euro-dollar market which resulted into3
1. Increase of indebtedness of these banks on the Euro-dollar
market.
2. Flight of American capital, attracted by the interest rate on
Euro-market.
Ñrogramme of voluntary restrictions on investments: The USA
imposed various restrictions on its financial system to tackle
BOP problems.
Euro-credit are medium-term loans (with variable rate linked to
Euro-currency deposits and accorded by an international bank
syndicate).
Ñarticipants in Euro-credit market: the major lending banks
in euro-credit market are euro-banks, American, japanese,
british, swiss, french, german and Asian banks, first national
bank of chicago etc. Among the borrowers, there are banks
like multinational groups, public utilities, government
agencies, local authorities etc.
There are two kinds of bonds are treated in external bond
market.
J Euro bonds: bonds sold outside the country of currency
denomination.
2 oreign bonds: foreign bonds issued on the market of a
country and bought by non-residents, in the currency of
that country.
Ñarticipants in euro ±bond market: the major participants are
enterprises and financial institutions as well as investing
agencies.
!traight bonds: these are most current and represent
about three-fourth of the total volume.
loating rate bonds: the interest rate of these bonds is
revised every six months.
Convertible bonds: These bonds may be converted into
shares of the issuing company.
loating rate bonds with collar: the rates of these bonds can
fluctuate between a certain minimum and fixed
maximum.
@everse floating rate bonds: These bonds pay a higher
interest rate when the rate of reference decreases. The
coupon is fixed at a rate minus-LIBOR.so, when LIBOR
decreases, the interest rate increases.
m These financial products hybrid between euro bonds and foreign
bonds.
They consist of three categories:
1. Renewable euro notes
2. Euro-commercial paper
3. Euro medium term notes
i 
  :

lexibility: A borrower who is already committed to a rate suffers loss if


the rate decreases subsequently. But the enterprise that has
resorted to euro notes can wait before borrowing if it thinks that
the rate is likely to go down.

Choice of maturity date: issuers who have euro notes have possibility of
issuing them for different maturity periods.
mEuro equities are the shares issued by resident companies
but sold in euro-currencies to non-residents.
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!ubscription: According to this method, the issuing company
sells its shares to an international syndicate which in turn
sells them to final buyers.
ook building3 According to this technique, the lead manager
constitutes both guarantee and placements syndicate. The
members of syndicates do marketing of shares to potential
buyers over a period which may last a few weeks. the lead
manager supervises operations, coordinates activities,
registers demands for shares, and then decides, in
consultation with the issuing company, the price of the
share according to volume of the issue.
Ñarticipating banks: American banks and financial
bodies, so far, dominate this market. Included are
Goldman sacks, credit swisse, morgan stanley, lehman
brothers, warburg securities, AB Amro bank. Some
european banks taking part are Paribas, swiss bank,
Deutsche bank etc.
Types of Development Banks
1.World Bank Group includes
a. International Bank for Reconstruction and
Development.
b. International Development Association
c. International Finance Corporation
2. Regional Development Banks
finance industry, agricultural, and
infrastructure projects
3. National Development Banks concentrate on a
particular industry or region.