The future of the IMF: how to prevent the next global financial crisis
AbstractThe paper analyzes how the next financial crisis can be prevented and which role the IMF should play. The paper distinguishes between the improvement of existing instruments and solving the moral hazard problem. Both issues are interrelated. The size of operation of the IMF creates a moral hazard problem. The IMF should credibly announce the ex-post rules for bridging a liquidity gap in order to set the right ex-ante incentives for the behavior of debtors and creditors. An institutional design for dealing with private and sovereign debt analogous to national bankruptcy rules has to be developed.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 870.
Date of creation: 1998
Date of revision:
Find related papers by JEL classification:
- F00 - International Economics - - General - - - General
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
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