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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. Olivier Jeanne, 2001. "The International Lender of Last Resort," IMF Working Papers 01/76, International Monetary Fund.
  2. Mark M. Spiegel, 2000. "Solvency runs, sunspot runs, and international bailouts," Working Paper Series 2001-05, Federal Reserve Bank of San Francisco.
  3. Peter B. Clark & Haizhou Huang, 2001. "International Financial Contagion and the Fund," IMF Working Papers 01/137, International Monetary Fund.
  4. Olivier Jeanne & Charles Wyplosz, 2001. "The International Lender of Last Resort: How Large is Large Enough?," NBER Working Papers 8381, National Bureau of Economic Research, Inc.
  5. 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 2001-28, Claremont Colleges.
  6. Gai,Prasanna & Simon Hayes & Hyun Song Shin, 2002. "Crisis costs and debtor discipline: the efficacy of public policy in sovereign debt crises," Departmental Working Papers 2002-02, The Australian National University, Arndt-Corden Department of Economics.
  7. Giancarlo Corsetti & Bernardo Guimaraes & Nouriel Roubini, 2003. "International Lending of Last Resort and Moral Hazard: A Model of IMF's Catalytic Finance," NBER Working Papers 10125, National Bureau of Economic Research, Inc.
  8. Peter Clark & Haizhou Huang, 2006. "International Financial Contagion and the Fund —A Theoretical Framework," Open Economies Review, Springer, vol. 17(4), pages 399-422, December.
  9. Manmohan S. Kumar & Avinash Persaud, 2001. "Pure Contagion and Investors Shifting Risk Appetite," IMF Working Papers 01/134, International Monetary Fund.

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