The International Monetary Fund is developing a contingency plan to deal with possible currency crises in emerging economies by providing easy access to dollars. This was revealed by the Japanese newspaper Nikkei, without citing sources.
The new system aims to address the collapse of emerging currencies that could be triggered by a massive flight of capital. Money flows, in fact, are destined to return to the United States now that the Federal Reserve has begun to raise interest rates, thus strengthening the attraction of the dollar.
The IMF fears that the corresponding capital outflows from emerging economies could devalue their currencies causing financial crises, also fueled by the growth in external debt burdens and speculation.
The new mechanism designed by the IMF should help crisis countries to borrow dollars, mainly through short-term credit, with a maturity of one year or less.
The Nikkei writes that "the International Monetary Fund will evaluate potential borrowers as in normal conditions" and that "loans will be limited according to the capital contribution of each country".
The peculiarity of this scheme is that it will not require costly structural reforms: “The Fund – writes the newspaper – plans to officially introduce this new scheme at the meeting of its governing body at the end of the month. And it has already started discussions with the countries of the Association of Southeast Asian Nations”.
Asian countries remember well the currency crisis of 1997. On that occasion, the IMF had supported Indonesia above all, however imposing rigorous conditions such as, for example, the obligation to allow banks in difficulty to go bankrupt.
According to the Nikkei, that crisis would have fueled a feeling of hostility towards the International Monetary Fund from a part of the countries of the ASEAN group.
