ABSTRACT
Monetary-financial crises cause severe damage. Therefore, the goal of countries and international institutions must be to prevent such crises. A stable money requires a set of conditions including the independence of a central bank (section 9.1). The solidity of the banking system is an important condition for financial stability (section 9.2). When a financial crisis arises, it is the role of the IMF to prevent it from spreading into a systemic crisis of the global economy and to provide fresh capital to the country in trouble (section 9.3). The IMF cannot be the world’s lender of last resort (section 9.4). Some propose to impede and control international capital flows in order to reduce exchange rate volatility, but this wipes out the gains from the international division of labor (section 9.5).
