On the Viability of an International Lender of Last Resort

Benedikt Zanker

doi:10.5771/9783845201122

On the Viability of an International Lender of Last Resort

Reihe: Aktuelle Materialien zur Internationalen Politik

Band 73 1. Auflage 2007

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doi.org/10.5771/9783845201122
ISBN print: 978-3-8329-2568-0
ISBN online: 978-3-8452-0112-2
Nomos, Baden-Baden Nomos, Baden-Baden

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Abstract

Over the last decade the global financial system has been shaken by financial crises in emerging economies all over the world. The result of these crises has been turmoil in financial markets, a severe deceleration of economic growth and hardship in the economies involved. The International Monetary Fund was quickly identified as a main culprit and has been the subject of intense debate ever since. While a consensus has developed that the Fund is in need of wide-ranging reforms, an agreement on which reform path to follow is still lacking. An often recurring proposal is to restructure the IMF into an international lender of last resort along the lines developed by Walter Bagehot, then editor of the Economist, in the late 19th century. Although this proposal appears initially suggestive, it has been frequently dismissed out of hand as unrealistic by policy makers as well as academics. The book analyses in detail whether this dismissal is founded or whether a rigourous reform along Bagehotian lines could indeed help to increase the stability of the global financial system.

Kapitel Ausklappen | EinklappenAutorenSeiten
2–12 Titelei/Inhaltsverzeichnis 2–12
13–14 Acknowledgements 13–14
15–46 1. Introduction and Theory 15–46
47–67 2. Financial Crisis Theory 47–67
- 47–53 2.1 Financial Crises in an International Context 47–53
  - 47–52 2.1.1 Four Types of Currency Crises 47–52
  - 52–53 2.1.2 The Problem of Contagion 52–53
- 53–62 2.2 Three Generations of Financial Crisis Models 53–62
- 62–67 2.3 Evidence and Evaluation 62–67
  - 62–63 2.3.1 Empirical Evidence 62–63
  - 63–66 2.3.2 Evaluation 63–66
  - 66–67 2.3.3 Lessons and Implications 66–67
68–89 3. Selected Proposals to Increase Global Financial Stability 68–89
- 68–76 3.1 General Proposals to Increase Global Financial Stability 68–76
  - 68–71 3.1.1 Improved Transparency and Higher Regulatory Standards 68–71
  - 71–72 3.1.2 An International Credit Insurance 71–72
  - 72–74 3.1.3 The Tobin Tax 72–74
  - 74–75 3.1.4 A Global Central Bank 74–75
  - 75–76 3.1.5 A World Currency 75–76
- 76–88 3.2 Proposals Addressing the Role of the IMF 76–88
  - 76–78 3.2.1 A Sovereign Debt Restructuring Mechanism 76–78
  - 78–80 3.2.2 The Calomiris Proposal 78–80
  - 80–84 3.2.3 The Report by the Independent Task Force 80–84
  - 84–86 3.2.4 The Meltzer Report 84–86
  - 86–88 3.2.5 The Köhler Approach: Procedural Changes 86–88
- 88–89 3.3 Conclusion 88–89
90–116 4. The Lender of Last Resort: The Concept in Theory 90–116
117–145 5. The Lender of Last Resort: The Concept in Practice 117–145
- 117–124 5.1 The Panic of 1907 117–124
  - 117–120 5.1.1 The Setting 117–120
  - 120–121 5.1.2 The Run on Banks and Trust Companies 120–121
  - 121–123 5.1.3 Pressure on Money, Stock and Call Loan Markets 121–123
  - 123–124 5.1.4 Lessons of 1907 123–124
- 124–129 5.2 The 1960s Sterling Crisis 124–129
  - 124–125 5.2.1 The Setting 124–125
  - 125–128 5.2.2 The Crisis 125–128
  - 128–129 5.2.3 Lessons of the Sterling Crisis 128–129
- 129–145 5.3 Emerging Market Crises in the 1990s 129–145
146–172 6. The Principle of Lending Freely 146–172
173–202 7. The Collateral Question 173–202
203–229 8. Pre-qualification 203–229
230–252 9. Moral Hazard 230–252
- 230–233 9.1 IMF Induced Moral Hazard 230–233
- 233–244 9.2 Empirical Evidence on Moral Hazard Issues 233–244
  - 233–241 9.2.1 Evidence on Creditor-side Moral Hazard 233–241
  - 241–244 9.2.2 Evidence on Debtor-side Moral Hazard 241–244
- 244–249 9.3 Catalytic Finance 244–249
  - 9.3.1 Empirical Evidence on Catalytic Finance
- 249–252 9.4 Instruments Mitigating Moral Hazard Problems 249–252
253–282 10. Principal-Agent Problems 253–282
283–310 11. Sovereign Debt Restructuring 283–310
- 283–287 11.1 Debt Restructuring in the Past 283–287
  - 283–286 11.1.1 New Money Approach 283–286
  - 286–287 11.1.2 The Brady Plan 286–287
- 287–294 11.2 The Changed Environment 287–294
  - 287–290 11.2.1 Successful Restructurings 287–290
  - 290–293 11.2.2 Problems due to Renegade Creditors 290–293
  - 293–294 11.2.3 Need for Reform 293–294
- 294–303 11.3 Proposals to Facilitate Sovereign Debt Restructuring 294–303
  - 294–297 11.3.1 A Code of Good Conduct 294–297
  - 297–300 11.3.2 Collective Action Clauses 297–300
  - 300–303 11.3.3 A Sovereign Debt Restructuring Mechanism 300–303
- 303–310 11.4 SDRM versus CAC and Code of Conduct 303–310
  - 303–309 11.4.1 Concerns on the Effectiveness of Collective Action Clauses 303–309
  - 309–310 11.4.2 Market-based Approach as the Way Forward 309–310
311–330 12. A Proposal 311–330
331–344 13. Epilogue: Chances of Implementation 331–344
- 331–337 13.1 Opposition to Reform 331–337
  - 331–336 13.1.1 Opposition by Developed Countries and the G-7 331–336
  - 336–337 13.1.2 The Lacking Clout of Developing Economies 336–337
- 337–344 13.2 The Potential for Gradual Reform 337–344
  - 337–341 13.2.1 Regional Monetary Cooperation 337–341
  - 341–344 13.2.2 Changes Inside the IMF 341–344
345–345 Appendix 345–345
345–346 Abbreviations 345–346
347–374 Bibliography 347–374

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