On the Need for an International Lender of Last Resort
- (pp. 85-104)
(Complimentary)
Abstract
Is there a useful function for an international lender of last resort (ILLR)--defined as crisis lender and crisis manager? Yes for international capital flows are excessively volatile and contagious, and because an ILLR can help mitigate the effects of this instability. I examine the Bagehot rules, and their applicability in an international context, focusing on the problem of moral hazard. I argue that a critical condition for the successful operation of an ILLR, a role that is to an important extent played by the IMF, is to ensure private sector involvement in the resolution of emerging market financial crises.Citation
Fischer, Stanley. 1999. "On the Need for an International Lender of Last Resort." Journal of Economic Perspectives, 13 (4): 85-104. DOI: 10.1257/jep.13.4.85JEL Classification
- F34 International Lending and Debt Problems
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- F33 International Monetary Arrangements and Institutions
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