The Multilateral Response to the Global Crisis: Rationale, Modalities, and Feasibility
Peer Reviewed
Date issued
June 2009
Subject
Financial Crisis and Structural Adjustement
JEL code
F3 - International Finance;
F30 - International Finance: General;
F31 - Foreign Exchange;
F32 - Current Account Adjustment • Short-Term Capital Movements;
F33 - International Monetary Arrangements and Institutions;
F34 - International Lending and Debt Problems;
F35 - Foreign Aid;
F36 - Financial Aspects of Economic Integration;
F37 - International Finance Forecasting and Simulation: Models and Applications;
F39 - International Finance: Other;
F53 - International Agreements and Observance • International Organizations
Category
Working Papers
The paper reviews the case for a strong multilateral response to the global crisis in emerging markets (EMs). It discusses modalities and feasibility of intervention and its associated risks, depending on country circumstances of fiscal space and liquidity needs. The specific role of Multilateral Development Banks (MDBs) in ensuring the development effectiveness of the fiscal response is also discussed. The paper concludes by highlighting the international financial architecture issues raised by the global crisis that cannot be addressed immediately but will need to be dealt with once the current crisis has been tamed.
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