By IMFBlog

December 19, 2017

Walking on a safety net: countries need insurance in bad economic and financial times (photo: Vivek Prakash/Newscom).

If you are lucky, when the going gets tough, you have a group of people you can rely on to help you through a crisis. Countries are no different—a safety net to help them in bad economic and financial times can make the difference in peoples’ lives.  

Insurance against crises

The global financial safety net should help countries in three ways: provide insurance to help prevent crises; supply financing to countries if crises materialize; and provide incentives for countries to adopt the right policies.

Here is a quick breakdown of the safety net.  It has four main layers:

  • countries’ own reserves;
  • bilateral swap arrangements between two countries;
  • regional financing arrangements; and
  • the IMF.

All these layers have expanded over the past 20 years. Den Rest des Beitrags lesen »