Is there a need for an international lender of last resort?

In a luncheon speech at the American Economic Association meeting on January 3, 1999, Stanley Fischer, first deputy managing director of the International Monetary Fund, argued the case, in a reformed international financial system, for ‘an agency that will act as lender of last resort for countries facing a crisis.’ He asserts that there is a need for such an agency and ‘that the IMF is increasingly playing that role, and that changes in the international system now under consideration will make it possible for it to exercise that function more effectively’ (Fischer 1999: 8-9). One would never know from Fischer’s remarks that the IMF has been subject to serious charges by critics of its performance – not only with respect to its policy recommendations but also with respect to the basic loan agenda as creating moral hazard for country borrowers and foreign lenders. His lengthy discussion of moral hazard never implicates the IMF. He offered nothing more than a public relations effort to promote an expansive role for the IMF.