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Global Financial Crises

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Author Info

  • Manmohan S. Kumar
  • Paul R. Masson
  • Marcus Miller

Abstract

Increasing emphasis has been placed on the need for an effective lender of last resort for sovereign states and on procedures for sovereign debt restructuring to help cope with global financial crises. Where private creditors use short-term debt to check sovereign debtor’s moral hazard, there is the risk of self-fulfilling crises. In this context, we conclude that the proposal of the Meltzer Commission—for unconditional financial support, but only to states that pre-qualify—could be the source of increased instability. After discussing analogies with private sector arrangements, we compare the operations of the existing Paris Club with proposed Chapter 11 style procedures.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 00/105.

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Length: 25
Date of creation: 01 Jun 2000
Date of revision:
Handle: RePEc:imf:imfwpa:00/105

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Keywords: International monetary reform; short-term debt; sovereign debt; liquidity crises; short term debt; moral hazard; debt restructuring; bond; sovereign debt restructuring; financial institutions; debt reduction; central bank; international lending; financial system; debt service; equity finance; bonds; private creditors; present value; brady bonds; sovereign debt crises; long-term debt; international financial architecture; financial instability; debt crisis; hedge; debt relief; amount of debt; international capital; reserve bank; debt stocks; debtor country; debt overhang; deposit insurance; debt crises; sovereign debtor; hedge funds; debt outstanding; international finance; debt service capacity; sovereign borrowers; liquidity crisis; private banks; commercial creditors; joint stock; stock markets; net present value; future cash flows; sovereign borrower; debt maturity; private sector borrowers; financial systems; cash flows; international borrowing; public debt; private debtor; international capital markets; sovereign default; private sector creditors; financial regulation; external payments; financial corporations; central banks; financial sector; international bond; domestic financial systems; domestic public debt; sovereign debts; liquidity support; indebted countries; international debts; individual bond;

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Citations

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Cited by:
  1. Corsetti, Giancarlo & Guimaraes, Bernardo & Roubini, Nouriel, 2006. "International lending of last resort and moral hazard: A model of IMF's catalytic finance," Journal of Monetary Economics, Elsevier, Elsevier, vol. 53(3), pages 441-471, April.
  2. Peter Clark & Haizhou Huang, 2006. "International Financial Contagion and the Fund —A Theoretical Framework," Open Economies Review, Springer, Springer, vol. 17(4), pages 399-422, December.
  3. Jeanne, Olivier & Wyplosz, Charles, 2001. "The International Lender of Last Resort: How Large is Large Enough?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2842, C.E.P.R. Discussion Papers.
  4. Hyun Song Shin & Prasanna Gai & Simon Hayes, 2001. "Crisis costs and debtor discipline: the efficacy of public policy in sovereign debt crises," FMG Discussion Papers, Financial Markets Group dp390, Financial Markets Group.
  5. Olivier Jeanne, 2001. "The International Lender of Last Resort," IMF Working Papers 01/76, International Monetary Fund.
  6. Thomas D. Willett, 2001. "Restructuring IMF Facilities to Separate Lender of Last Resort and Conditionality Programs: The Meltzer Commission Recommendations as Complements rather than Substitutes," Claremont Colleges Working Papers, Claremont Colleges 2001-28, Claremont Colleges.
  7. Manmohan S. Kumar & Avinash Persaud, 2001. "Pure Contagion and Investors Shifting Risk Appetite," IMF Working Papers 01/134, International Monetary Fund.
  8. Spiegel, Mark M., 2005. "Solvency runs, sunspot runs, and international bailouts," Journal of International Economics, Elsevier, Elsevier, vol. 65(1), pages 203-219, January.
  9. Peter B. Clark & Haizhou Huang, 2001. "International Financial Contagion and the Fund," IMF Working Papers 01/137, International Monetary Fund.

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