Towards a sovereign bankruptcy procedure and greater restraint in IMF crisis lending. An interim assessmen

The paper reviews the area of the international financial architecture relating tosovereign crisis resolution. It is argued that shifting part of the burden of crisisresolution onto creditors may encourage debtor countries to take early action to counter an unsustainable debt path. Collective action clauses, the sovereign debt restructuring mechanism, and ceilings on IMF loans, are all necessary components of a new and better crisis resolution framework

Promoting Financial Stability in Emerging-Market Countries: The Soft Law Approach and Beyond1

This paper reviews the analytical foundations and the content of current efforts to extend market-augmenting financial regulation to emerging market countries. It is argued that the ‘soft law’ approach being pursued by the official community constitutes an attempt to reconcile the need for cross-country harmonization with the equally pressing need for embedding the banking safety-net into the domestic institutional and legal environment. For this reason, its limitations notwithstanding, the current strategy seems preferable to alternative ones, such as centralizing supervisory authority at the world level or tying IMF lending to a limited set of structural criteria. However, the strategy could be significantly strengthened by: actively promoting foreign entry in the domestic financial sector; giving more emphasis to official incentives, such as market-access policies and “name and shame” methods; building a “hard roof”, in the form of a declaration of principles enshrining the twin notions that capital mobility is a desirable feature of the international environment and that financial stability is to be regarded as an international public good. Comparative Economic Studies (2002) 44, 125–167; doi:10.1057/ces.2002.12

Enemy of None But a Common Friend of All? An International Perspectiveon the Lender-Of-Last-Resort Function

The paper explores whether and how national lender-of-last-resort practices can be adapted internationally. Nationally, the effectiveness of such practices is based on a blend of resource availability, technical discretion as to the conditions attached, ex ante supervision, and powers of enforcement. Some features of the international environment, however, make it difficult to replicate this structure, which may explain why recent large-scale rescue packages have worked less than satisfactorily. Private contingent credit facilities and IMF lending into arrears in the context of internationally approved, temporary moratoria on foreign debt may nonetheless offer some scope for effective, although limited in aims and resources, international liquidity support, but this would require amending the IMF’s Articles of Agreement.

Bedfellows, Hostages, or Perfect Strangers? Global Capital Markets and the Catalytic Effect of IMF Crisis Lending

During the 1990s, the concept of "catalytic official finance" (COF) gained prominence in policy debates. The concept revolves around the idea that the propensity of investors to lend to a country increases when the IMF provides its "seal of approval"-backed up by only limited official financing-on the country''s economic program. COF aims at avoiding, on the one hand, the massive use of public money to bail out private investors; on the other, the recourse to coercive bailing-in mechanisms. The paper concludes that COF, while possibly useful in other contexts, is less reliable when used to manage capital account crises.International Monetary Fund;capital inflows, private capital inflows, private capital, current account, capital outflow, debt crisis, capital markets, capital account crises, debt restructuring, private capital flows, moral hazard, capital mobility, private investors, capital flows, capital movements, external debt, international capital markets, debt service, balance of payment, debt reduction, crisis prevention, private banks, international capital, sovereign debt restructuring, capital account convertibility, current account adjustment, sovereign debt, capital inflow, debt rescheduling, crisis countries, liquidity crises, capital account liberalization, debt relief, central banks, bond issues, net capital, private creditors, speculative attack, balance of payment crises, current account deficit, repayments, commercial bank loans, global capital markets, capital controls, private inflows, credit union, private flows, short-term debt, access to international capital markets, speculative attacks, capital outflows, access to international capital, international lending, balance of payments, external obligations, credit tranches, international bonds, external liabilities, commercial creditors, private capital inflow, balance of payment crisis, central bank, foreign loans, liquidity ? crises, private credit, capital accounts, amount of debt, official creditors, capital control, external finance, debtor country, debt problem, external debt service, domestic debt, foreign debts, current account surpluses, reserve bank, sovereign debtors, flows of capital, long-term debt, debt problems, debt restructuring operations, private finance, commercial bank loan, indebted countries, debt contracts, foreign debt

Credibility Without Rules

During the last 25 years, monetary practice in most countries has increasingly been characterized by the attempt to achieve credibility of purpose while expanding the freedom of monetary authorities in controlling policy instruments. Thus, the world has moved toward monetary frameworks in which, through appropriate institutional devices, a better trade-off between credibility of goals and flexibility of instruments could be achieved. This attempt, surveyed in this paper, has taken many forms, depending on the countries economic, institutional, and cultural specificities.