IMF COVID-19 Response—A New Short-Term Liquidity Line to Enhance The Adequacy Of The Global Financial Safety Net

Policy Papers, April 22, 2020

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Canonical URL: IMF COVID-19 Response—A New Short-Term Liquidity Line to Enhance The Adequacy Of The Global Financial Safety Net

The COVID-19 pandemic has created severe disruption in the global financial system, with many emerging market and developing countries (EMDCs) facing liquidity shortages.
In the context of intensified demand for liquidity and heightened global uncertainty, staff revisited the 2017 proposal for a new facility to provide liquidity support to the Fund’s membership.
The paper proposes the establishment of a new Short-term Liquidity Line (SLL) as a special facility in the General Resources Account (GRA), based on the key features of the 2017 blueprint.

Identifies liquidity shortages and intensified global liquidity demand affecting EMDCs.
Revisits the 2017 blueprint for a new facility to provide liquidity support to IMF membership.
Proposes operationalizing a Short-term Liquidity Line (SLL) within the GRA to enhance the adequacy of the global financial safety net.

Establish the Short-term Liquidity Line (SLL) as a special facility in the General Resources Account (GRA).
Base the SLL on the key features from the 2017 blueprint to address short-term liquidity needs of eligible members.
Target liquidity support to EMDCs experiencing liquidity shortages amid heightened global uncertainty.