On the Need for an International Lender of Last Resort
AbstractIs there a useful function for an international lender of last resort (ILLR)--defined as crisis lender and crisis manager? Yes for international capital flows are excessively volatile and contagious, and because an ILLR can help mitigate the effects of this instability. I examine the Bagehot rules, and their applicability in an international context, focusing on the problem of moral hazard. I argue that a critical condition for the successful operation of an ILLR, a role that is to an important extent played by the IMF, is to ensure private sector involvement in the resolution of emerging market financial crises.
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Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 13 (1999)
Issue (Month): 4 (Fall)
Find related papers by JEL classification:
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- 'The Crisis as a Classic Financial Panic'
by Mark Thoma in Economist's View on 2013-11-09 15:59:21
- The Crisis as a Classic Financial Panic
by Guest Author in Credit Writedowns on 2013-11-11 00:00:05
- The Crisis as a Classic Financial Panic
by Barry Ritholtz in The Big Picture on 2013-11-10 10:00:37
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