Traditionally, banks have been the dominant source of funds for developing countries, but bond markets have been an increasingly important source of funding in recent years (see Global Finance in Action 12.2). Nevertheless, the international banking community still seems fragile and vulnerable because of the sheer magnitude of the global debt outstanding. As shown in table 12.4, the external debt of 138 developing countries reached a total of $2,433 billion at the end of 2003. Loans from the world's private banks to more than 100 developing countries that do not produce oil represent half the total external debt of these countries. The number of banks holding this debt ranges from 800 to 1,000, and includes most of the major banks in the industrial countries.
Global Finance in Action 12.2
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