Global Financial Crises : Institutions and Incentives

Author/Editor:

Manmohan S. Kumar ; Paul R Masson ; Marcus Miller

Publication Date:

June 1, 2000

Electronic Access:

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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:

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. 00/105

Subject:

English

Publication Date:

June 1, 2000

ISBN/ISSN:

9781451852813/1018-5941

Stock No:

WPIEA1052000

Format:

Paper

Pages:

25

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