Global Financial Crises: Institutions and Incentives

By Manmohan S. Kumar, Paul R Masson, Marcus Miller

June 1, 2000

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Format: Chicago

Manmohan S. Kumar, Paul R Masson, and Marcus Miller. Global Financial Crises: Institutions and Incentives, (USA: International Monetary Fund, 2000) accessed September 19, 2024

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.

Subject: Asset and liability management, Financial crises, Financial sector policy and analysis, Lender of last resort, Liquidity, Moral hazard, Sovereign debt restructuring, Tax incentives

Keywords: Debt maturity, Debt rollover, Debtor country, Emerging market, Financial crises, Global, International monetary reform, Lender of last resort, Liquidity, Long-term debt, Moral hazard, One-off debt reduction, Private sector, Short term, Short term debt, Sovereign debt restructuring, Valuation model, Values jump, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/105
Stock No:

WPIEA1052000
ISBN:

9781451852813
ISSN:

1018-5941

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