The International Lender of Last Resort: How Large is Large Enought?

May 1, 2001

Preview Citation

Format: Chicago

Olivier D Jeanne. The International Lender of Last Resort: How Large is Large Enought?, (USA: International Monetary Fund, 2001) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper considers how an international lender of last resort (LOLR) can prevent self-fulfilling banking and currency crises in emerging economies. We compare two different arrangements: one in which the international LOLR injects liquidity into international financial markets, and one in which its resources are used to back domestic banking safety nets. Both arrangements would require important changes in the global financial architecture: the first one would require a global central bank issuing an international currency, while the second one would have to be operated by an "international banking fund" closely involved in the supervision of domestic banking systems.

Subject: Bank solvency, Banking, Currencies, Currency mismatches, Exchange rates, Financial crises, Financial sector policy and analysis, Foreign exchange, Lender of last resort, Money

Keywords: Asian crisis, Bank assets, Bank collapse, Bank run, Bank runs, Bank solvency, Banking sector, Banks' assets, Bank's depositor, Central bank, Credit crunch, Currencies, Currency depreciation, Currency mismatches, Currency risk, Deposit insurance, Discount window, Dollarization, Domestic bank, Exchange rate regime, Exchange rates, Global, Interest rate, International LOLR, Lender of last resort, Multiple equilibria, Solvency of bank, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/076
Stock No:

WPIEA0762001
ISBN:

9781451849875
ISSN:

1018-5941

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