from Yona Maro

As problems in the eurozone threaten to spread more widely through the global economy, in the run-up to the Cannes G20 Summit international policy-makers are actively considering strengthening support measures for countries affected.

Beyond the EU Heads of State agreements of 27 October 2011, both the International Monetary Fund and regional financing arrangements (especially in Europe and Asia) have a big role to play in avoiding fears that existing mechanisms are inadequately resourced and too inflexible to deal with another systemic crisis.

Consideration needs to be given to substantially augmenting the IMF’s fire-power (including allowing it to borrow from the markets), improving cooperation between the IMF and regional arrangements, and setting up a multilateral system of central bank swap arrangements.

More flexible ways for countries to access the IMF’s new borrowing facilities could be achieved through automatic pre-qualification processes, and making clear the scale of resources available.

It will not be easy to get agreement to these reforms, but the cost of not having effective mechanisms in place to deal with systemic crises in future would be enormous.

http://www.chathamhouse.org/sites/default/files/public/Research/International%20Economics/1011bp_pickford.pdf —
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