Securing the safety net for working-age adults


Securing the safety net for working-age adults


Global Financial Safety Nets: Where Do We Go from Here?

Eduardo Fernández-Arias and
Eduardo Fernández-Arias Senior Advisor, Research Department, Inter-American Development Bank
Eduardo Levy Yeyati

January 14, 2011

Editor’s Note: An earlier version of this paper was published in the IDB Working Paper Series, in November 2010.


An analysis of the performance of the global financial safety net during the 2008-2009 crisis, and an evaluation of its new components, indicates that, from an emerging markets perspective, the net remains full of holes despite recent stitches. This paper therefore proposes an effective and workable international lender of last resort (ILLR) for systemic liquidity crises based on: i) an automatic trigger to access the facility; ii) unilateral country prequalification to the facility during Article IV consultations; and iii) liquidity funded by the world’s “issuers of last resort.” These principles would support a reliable and broad-based ILLR without the carrying costs associated with inefficient reserve hoarding, which would actually work as an effective preventive facility with minimal room for moral hazard.

Read the full report at the Inter-American Development Bank »