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New IMF Lending Facilities and Financial Stability in Emerging Markets

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Author Info

  • Jari John

    ()
    (Martin Luther University, Universitätsplatz 10, 06108 Halle-Wittenberg, Germany)

  • Tobias Knedlik

    ()
    (Halle Institute for Economic Research, Kleine Märkerstraße 8, 06108 Halle (Saale), Germany)

Abstract

In the light of the current global financial and economic crisis, the International Monetary Fund (IMF) has undertaken some major reforms of its lending facilities. The new Flexible Credit Line and the High Access Precautionary Arrangements differ from what has been in place so far, by allowing for ex ante conditionality. This paper summarizes preconditions for effective last resort lending and evaluates the newly introduced measures, concluding that the Flexible Credit Line comes very close to what has been called an International Lender of Last Resort. The main obstacles are the low demand and slow progress in complementary reforms.

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Bibliographic Info

Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 41 (2011)
Issue (Month): 2 (September)
Pages: 225-238

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Handle: RePEc:eap:articl:v:41:y:2011:i:2:p:225-238

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Related research

Keywords: IMF Lending; Flexible Credit Line; Financial Stability; Emerging Markets;

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References

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  1. Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," NBER Working Papers 7265, National Bureau of Economic Research, Inc.
  2. Catherine L. Mann, 1999. "Market Mechanisms to Reduce the Need for IMF Bailouts," Policy Briefs PB99-04, Peterson Institute for International Economics.
  3. Tobias Knedlik & Johannes Ströbel, 2007. "Bankenregulierung: Die Mindesteigenkapitalvorschriften von Basel II verstärken die Übertragung von Währungskrisen auf Bankenkrisen," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 13(8), pages 317-320.
  4. Barry Eichengreen & Poonam Gupta & Ashoka Mody, 2006. "Sudden Stops and IMF-Supported Programs," NBER Working Papers 12235, National Bureau of Economic Research, Inc.
  5. Curzio Giannini, 1999. "Enemy of None But a Common Friend of All? An International Perspectiveon the Lender-Of-Last-Resort Function," IMF Working Papers 99/10, International Monetary Fund.
  6. Tobias Knedlik & Johannes Ströbel, 2007. "Führt neues IWF-Instrument zur Prävention von Währungskrisen?," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 13(7), pages 269-274.
  7. Rodrik, Dani, 2006. "The Social Cost of Foreign Exchange Reserves," CEPR Discussion Papers 5483, C.E.P.R. Discussion Papers.
  8. Stanley Fischer, 1999. "On the Need for an International Lender of Last Resort," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 85-104, Fall.
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Citations

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Cited by:
  1. Presbitero, Andrea F. & Zazzaro, Alberto, 2012. "IMF Lending in Times of Crisis: Political Influences and Crisis Prevention," World Development, Elsevier, vol. 40(10), pages 1944-1969.
  2. Claudia M. Buch, 2012. "From the Stability Pact to ESM - What next?," IAW Discussion Papers 85, Institut für Angewandte Wirtschaftsforschung (IAW).
  3. Adam Hawkins & Jyoti Rahman & Thomas Williamson, 2014. "Is the global financial safety net at a tipping point to fragmentation?," Economic Roundup, Treasury, Australian Government, issue 1, pages 1-20, April.

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