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Economic Research

Is a European Monetary Fund a Useful Complement to the IMF?

EXECUTIVE SUMMARY

The current EMU framework is not prepared to deal with a debt rollover crisis of one of its members as there is no regional lender-of-last-resort mechanism in place. RGE recently advocated an IMF-led or joint IMF/EU financing package as the first-best solution as compared to an EU-only package. Both the potential size of any financing package and the need for credibility when enforcing conditionality argue in favor of looping in the IMF. In order to deal with a similar situation in the future, German finance minister Wolfgang Schaeuble laid out his plan for a new[...]

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