al Monetary Fund (IMF), however, plays a special role in this loan activity, because it, for the most part, establishes the rules of the game for all parties, as well as extending loans on its own (Lipson, 1985, pp. 201-202).
In the 1970s, the developing countries required capital for development, and they had populations clamoring for some of the economic benefits enjoyed by the residents of the developed countries. At that same time, commercial banks in the developed countries were awash in money (Kahler, 1985, pp. 11-13). The successful strategies of the Organization of Petroleum Exporting Countries (OPEC) in the 1970s had resulted in the transfer of enormous volumes of money from the developed countries to the OPEC countries. The OPEC countries required safe havens for their newly acquired capital, and banks in the developed countries provided those havens. The banks in the developed countries, after acquiring the OPEC money, needed borrowers for massive amounts of capital. The union of OPEC money and developing countries, with western banks as marriage broker, thus, appeared to be heavenly sent. The banks, in their eagerness to loan money, made the most optimistic assumptions possible with respect to sovereign risk, with the result that (1) they loaned too much to ris
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