The International Lender of Last Resort How Large is Large Enough?

38 Pages Posted: 15 Feb 2006

See all articles by Olivier Jeanne

Olivier Jeanne

International Monetary Fund (IMF) - Research Department; Ecole Nationale des Ponts et Chaussees (ENPC); Centre for Economic Policy Research (CEPR)

Charles Wyplosz

University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR)

Date Written: May 2001

Abstract

This paper considers how an international lender of last resort (LOLR) can prevent self-fulfilling banking and currency crises in emerging economies. We compare two different arrangements: one in which the international LOLR injects liquidity into international financial markets, and one in which its resources are used to back domestic banking safety nets. Both arrangements would require important changes in the global financial architecture: the first would require a global central bank issuing an international currency, while the second would have to be operated by an "international banking fund" closely involved in the supervision of domestic banking systems.

Keywords: lender of last resort bank runs multiple equilibria credit crunch exchange rate regime dollarization deposit insurance Asian crisis

JEL Classification: F32 F33 G21

Suggested Citation

Jeanne, Olivier and Wyplosz, Charles, The International Lender of Last Resort How Large is Large Enough? (May 2001). IMF Working Paper No. 01/76, Available at SSRN: https://ssrn.com/abstract=879589

Olivier Jeanne (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

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Ecole Nationale des Ponts et Chaussees (ENPC) ( email )

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Centre for Economic Policy Research (CEPR)

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Charles Wyplosz

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

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Geneva, CH-1211
Switzerland
+41 22 908 5946 (Phone)
+41 22 733 3049 (Fax)

HOME PAGE: http://heiwww.unige.ch/~wyplosz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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