NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Olivier Jeanne, Charles Wyplosz

NBER Working Paper No. 8381
Issued in July 2001
NBER Program(s):   IFM

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 one would require a global central bank issuing an international currency, while the second one would have to be operated by an 'international banking fund' closely involved in the supervision of domestic banking systems.

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Document Object Identifier (DOI): 10.3386/w8381

Published: The International Lender of Last Resort. How Large Is Large Enough?, Olivier Jeanne, Charles Wyplosz. in Managing Currency Crises in Emerging Markets, Dooley and Frankel. 2003

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