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A (New) Country Insurance Facility

Author/Editor: Cordella, Tito | Levy Yeyati, Eduardo
Authorized for Distribution: January 1, 2005
Electronic Access: Free Full Text (PDF file size is 130KB)
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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: To cope with the self-fulfilling liquidity runs that triggered many recent financial crises, we propose the creation of a country insurance facility. The facility, which we envisage as complementary to the existing multilateral lending facilities, would provide eligible countries with automatic access to a credit line at a predetermined interest rate. Eligibility criteria should be easily verifiable, focus on debt sustainability, and take into account the currency and maturity composition of the debt. Other critical design issues considered here include the size of the facility, its duration and charges, and the exit costs for a country that loses eligibility.
 
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Series: Working Paper No. 05/23
Subject(s): Insurance | Liquidity | Financial crisis | International financial system | International Capital Markets
Author's keyword(s): Country insurance | liquidity crises | international financial architecture
 
English  
    Published:   January 1, 2005        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2005023   Pages:   33
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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