Over the course of this year, commercial banks have tightened their lending standards, and quality spreads have increased in the bond market--especially in the high-yield sector. Activity in the IPO market has subsided as equity investors have turned away from riskier ventures.
Taking into account also the decline in equity prices since the spring and the rise in the foreign 5  BIS Review 113/2000  exchange value of the dollar, financial markets are imposing more restraint on the economy than they have in recent years.