Global Financial Crises: Institutions and Incentives
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Summary:
Increasing emphasis has been placed on the need for an effective lender of last resort for sovereign states and on procedures for sovereign debt restructuring to help cope with global financial crises. Where private creditors use short-term debt to check sovereign debtor’s moral hazard, there is the risk of self-fulfilling crises. In this context, we conclude that the proposal of the Meltzer Commission—for unconditional financial support, but only to states that pre-qualify—could be the source of increased instability. After discussing analogies with private sector arrangements, we compare the operations of the existing Paris Club with proposed Chapter 11 style procedures.
Series:
Working Paper No. 2000/105
Subject:
Asset and liability management Financial crises Financial sector policy and analysis Lender of last resort Liquidity Moral hazard Sovereign debt restructuring Tax incentives
English
Publication Date:
June 1, 2000
ISBN/ISSN:
9781451852813/1018-5941
Stock No:
WPIEA1052000
Pages:
25
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