a column by Beatrice Scheubel, Livio Stracca and Cédric Tille for VOX: CEPR’s Policy Portal
More than ten years on from the start of the Global Crisis, policymakers are discussing the effectiveness of the global financial safety net – the combination of reserves, central bank swap lines, regional financial arrangements, and the IMF.
This column evaluates the effectiveness of the use of IMF support and foreign reserves in globally driven crises. It finds that actual use of IMF support helps during currency crises – the type of crisis for which the support was originally designed.
Use of reserves is of limited effectiveness and only during sudden stops.
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