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Implementing an International Lender of Last Resort

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  • Knedlik, Tobias

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.

Suggested Citation

  • Knedlik, Tobias, 2006. "Implementing an International Lender of Last Resort," IWH Discussion Papers 20/2006, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-20-06
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    International-Lender-of-Last-Resort; Internationaler Währungsfonds; Währungskrisen; International Lender of Last Resort; International Monetary Fund; currency crises;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F02 - International Economics - - General - - - International Economic Order and Integration

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