Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142721
Authors: 
Reinhart, Carmen M.
Trebesch, Christoph
Year of Publication: 
2015
Series/Report no.: 
Munich Discussion Paper 2015-19
Abstract: 
A sketch of the International Monetary Fund's 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a "demand driven" theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively "new" IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became they key focus since the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing nations and now migrated to advanced ones. As a consequence, the IMF has engaged in "serial lending", with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency, most widespread among low income countries in chronic arrears to the official sector, but most evident in the case of Greece since 2010. We conclude that these practices impair the IMF's role as an international lender of last resort.
Subjects: 
IMF
currency crashes
financial crises
sovereign default
lender of last resort
international borrowing
JEL: 
E5
F33
F4
F55
G01
G2
G15
N0
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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