Strengthening the Global Financial Safety Net

58 Pages Posted: 17 Apr 2018

See all articles by Pilar L´Hotellerie-Fallois

Pilar L´Hotellerie-Fallois

Banco de España

Axel Brueggemann

Deutsche Bundesbank

Matthieu Bussière

Banque de France

Livia Chitu

European Central Bank (ECB)

Julia Estefanía

Banco de España

Sonsoles Gallego Herrero

Banco de España

Isabel Garrido

Banco de España

Caroline Janssens

National Bank of Belgium

Mary Keeney

Central Bank and Financial Services Authority of Ireland

Florian Lalanne

Banque de France

Alexander Landbeck

Deutsche Bundesbank

Christina Lerner

Oesterreichische Nationalbank (OeNB)

Claudia Maurini

Bank of Italy

Mayukh Mukhopadhyay

Bank of England

Xavier Serra

Banco de España

Luc Stevens

National Bank of Belgium

Melina A. Vasardani

European Central Bank (ECB)

Menno van der Ven

Bank of Greece

Benjamin Vonessen

European Central Bank (ECB)

Date Written: March 27, 2018

Abstract

Since the global financial crisis, the Global Financial Safety Net (GFSN), traditionally consisting mainly of countries’ own foreign exchange reserves with the International Monetary Fund (IMF) acting as a backstop, has expanded significantly with the continued accumulation of reserves, the sharp increase of swap lines between central banks, and the further development and creation of new Regional Financing Arrangements (RFAs). RFAs have expanded, reaching an aggregate size comparable to that of the IMF and becoming an integral layer of the safety net. Enhancing the cooperation between the IMF and RFAs so that they play complementary roles in case of global distress, becomes critical in order to further strengthen the multi-layered GFSN, while paying attention to issues such as moral hazard, stigma or exit strategies in connection with IMF-RFA cooperation. This paper presents recent experience and lessons learned in IMF-RFA cooperation and proposes how to improve their future interaction.

Keywords: Global Financial Safety Net, Regional Financing Arrangements, International Monetary Fund, moral hazard, stigma, exit strategies

JEL Classification: F33, F34, F53, F55

Suggested Citation

L´Hotellerie-Fallois, Pilar and Brueggemann, Axel and Bussiere, Matthieu and Chitu, Livia and Estefanía, Julia and Gallego Herrero, Sonsoles and Garrido, Isabel and Janssens, Caroline and Keeney, Mary and Lalanne, Florian and Landbeck, Alexander and Lerner, Christina and Maurini, Claudia and Mukhopadhyay, Mayukh and Serra, Xavier and Stevens, Luc and Vasardani, Melina A. and van der Ven, Menno and Vonessen, Benjamin, Strengthening the Global Financial Safety Net (March 27, 2018). ECB Occasional Paper No. 207. Available at SSRN: https://ssrn.com/abstract=3158959

Pilar L´Hotellerie-Fallois

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Axel Brueggemann

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Matthieu Bussiere

Banque de France ( email )

Paris
France

Livia Chitu

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Julia Estefanía

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Sonsoles Gallego Herrero

Banco de España ( email )

Madrid 28014
Spain

Isabel Garrido

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Caroline Janssens

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Mary Keeney

Central Bank and Financial Services Authority of Ireland ( email )

P.O. 559 Dame Street
Dublin 2, D2
Ireland

Florian Lalanne

Banque de France ( email )

Alexander Landbeck

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Christina Lerner

Oesterreichische Nationalbank (OeNB) ( email )

Otto-Wagner-Platz 3, PO Box 61
Vienna,
1010 Vienna, A-1011
Austria

Claudia Maurini

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Mayukh Mukhopadhyay

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Xavier Serra

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es/

Luc Stevens

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Melina A. Vasardani

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Menno Van der Ven

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Benjamin Vonessen (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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