1. International — IMF Crisis Decisions
- Publication Date:
- 11-2001
- Content Type:
- Policy Brief
- Institution:
- Oxford Analytica
- Abstract:
- The IMF's major shareholders have shown little willingness to provide new funds to Argentina. In deferring further assistance, the United States and other G7 shareholders have set limits on the international financial community's role in resolving a major emerging market financial crisis. The slowing global economy could provide an early test of these limits as it exposes weaknesses in other emerging markets — particularly those with larger geopolitical profiles than Argentina. Argentina's predicament highlights the Fund's paradox in wanting, on the one hand, to facilitate orderly resolution of crises (and prevent calamitous social impacts) and, on the other hand, to encourage markets to appropriately price risk by proving that non-optimal outcomes are possible. The risk of such outcomes is the basis upon which investors demand higher premiums from emerging market borrowers.
- Topic:
- International Organization, International Political Economy, and International Trade and Finance
- Political Geography:
- United States and Argentina