A Critical Review of the IMF's Tools for Crisis Prevention

DIE Discussion Paper 4/2012

50 Pages Posted: 19 Apr 2012

See all articles by Roberto Marino

Roberto Marino

affiliation not provided to SSRN

Ulrich Volz

University of London - School of Oriental and African Studies (SOAS) - Economics; Deutsches Institut für Entwicklungspolitik (DIE) - German Development Institute (DIE)

Date Written: February 18, 2012

Abstract

Against the backdrop of the International Monetary Fund’s (IMF) increasing focus on crisis prevention measures and the G20’s discussion of “global safety nets”, this paper analyses the IMF’s tools for crisis prevention, with particular emphasis on the recently developed Flexible Credit Line (FCL) and Precautionary Credit Line (PCL). The paper reviews why it took the Fund so long to develop crisis prevention facilities that would find subscribers and scrutinises initial experiences with the FCL and PCL. Moreover, it discusses the systemic implications of and problems associated with such crisis prevention facilities and examines why only so few countries are using these facilities thus far. Based on this analysis, it offers policy recommendations for the development of the IMF’s crisis prevention facilities.

Keywords: International Monetary Fund, crisis prevention facilities, Flexible Credit Line, Precautionary Credit Line

JEL Classification: F33, F42, F55

Suggested Citation

Marino, Roberto and Volz, Ulrich, A Critical Review of the IMF's Tools for Crisis Prevention (February 18, 2012). DIE Discussion Paper 4/2012. Available at SSRN: https://ssrn.com/abstract=2041870

Roberto Marino

affiliation not provided to SSRN ( email )

Ulrich Volz (Contact Author)

University of London - School of Oriental and African Studies (SOAS) - Economics

London, WC1E 7HU
United Kingdom

Deutsches Institut für Entwicklungspolitik (DIE) - German Development Institute (DIE) ( email )

Tulpenfeld 4
Bonn, 53113
Germany

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