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An Evaluation of Proposals to Reform the International Financial Architecture

An Evaluation of Proposals to Reform the International Financial Architecture

Chapter:
(p.225) 8 An Evaluation of Proposals to Reform the International Financial Architecture
Source:
Managing Currency Crises in Emerging Markets
Author(s):
Morris Goldstein
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226155425.003.0015

This chapter evaluates several proposals for the reform of the international financial architecture using the lending policies and practices of the International Monetary Fund (IMF) as an organizing device for discussing selected issues in the reform debate. These include proposals to increase the interest rate or reduce the maturity of IMF loans, to restrict the size of IMF rescue packages and to replace ex post macroeconomic policy conditionality of the IMF. The analysis reveals that proposals for addressing currency mismatching problems appear to be either too costly or too drastic. This chapter suggests a combination of managed floating and active development of hedging mechanisms.

Keywords:   international financial architecture, financial reform, IMF, interest rate, policy conditionality, currency mismatching, hedging

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