On the Need for an International Lender of Last Resort

Stanley Fischer

Journal of Economic Perspectives, 1999, vol. 13, issue 4, 85-104

Abstract: Is there a useful function for an international lender of last resort (ILLR)--defined as crisis lender and crisis manager? Yes for international capital flows are excessively volatile and contagious, and because an ILLR can help mitigate the effects of this instability. I examine the Bagehot rules, and their applicability in an international context, focusing on the problem of moral hazard. I argue that a critical condition for the successful operation of an ILLR, a role that is to an important extent played by the IMF, is to ensure private sector involvement in the resolution of emerging market financial crises.

JEL-codes: F33 F34 O16 (search for similar items in EconPapers)
Date: 1999
Note: DOI: 10.1257/jep.13.4.85
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Citations: View citations in EconPapers (270)

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