Financial crises can have a severe impact on the real side of the economy with countries losing up to 20 percent of GDP. The paper studies rules that prevent financial instability and currency crises. These include institutional arrangements for a solid banking system, prudent regulations and appropriate principles of monetary policy. The paper studies the role of the IMF in light of the past experience in preventing currency crises and a systemic breakdown of the world’s financial system and points out necessary IMF reforms. It discusses how the IMF should adjust to the structural changes in the world economy.
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number
1401.
Find related papers by JEL classification: E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions G2 - Financial Economics - - Financial Institutions and Services P00 - Economic Systems - - General - - - General
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