Implementing an International Lender of Last Resort

Tobias Knedlik

No 20/2006, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: Current research discusses various general frameworks for installing an international lender of last resort (ILOLR). However, it remains unclear how the ILOLR should actually operate. This paper discusses six different options of construction of an ILOLR who supports central banks in the case of currency crises. The paper concludes that the cost efficient version of the ILOLR would be direct interventions by the IMF by the use of IMF resources and the right to dispose additional reserves from central banks. The paper considers measures of cost efficiency, such as cost of borrowing, intervention, and sterilization and moral hazard problems.

Keywords: International-Lender-of-Last-Resort; Internationaler Währungsfonds; Währungskrisen; International Lender of Last Resort; International Monetary Fund; currency crises (search for similar items in EconPapers)
JEL-codes: F02 F33 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:iwh-20-06

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