Free Economics Essay - Financial IMF Banks

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Critically analyse the role of the International Monetary Fund in contradistinction from a central bank (e.g. the Bank of England) in the context of the financial crisis currently facing many countries across the world.

Abstract

This essay analyses the role of the International Monetary Fund (IMF) in contradistinction to a central bank in the current financial crisis. The central banks focused on will be the Bank of England, the United States' (US) Federal Reserve, and the European Central Bank (ECB).

My focus will not be on economic or financial analysis, although I will explain how the current financial crisis arose, without detailing the exhausting process of securitisation in banking definitions. All figures represented with the pound symbol (£) will represent British pounds, and all figures represented with a dollar symbol ($) will represent US dollars.

The financial crisis has resulted in the IMF agreeing a $15.7bn emergency rescue package with Hungary, a $2.1bn deal with Iceland and a $16.5bn programme for Ukraine[1]. Meanwhile, central banks around the world have been injecting money into the financial markets.

The British government has also announced and put into practice a £500bn bailout for the United Kingdom (UK) banking industry, and the United States has set-aside $700bn for Wall Street.[2]

This essay will detail the roles of the IMF and central banks generally, which will bring me to their roles in today's financial crisis. I will draw on historical sources where possible, and the current reactions of the IMF and central banks will come from books, journal articles, trusted news sources and the Economist magazine.

As well as extensive reading to understand the technical details of how the financial crisis came about, Niall Ferguson's 'The Ascent of Money', a six-part series screened on Channel 4, was an excellent aide in my understanding of the money market.

Introduction

'Money often costs too much.'[3] This is as true now as it was in the 1800s. A financial earthquake in the US set-off the tremors to the rest of the world's financial markets, wiping out hedge funds, obliterating respectable investment banks and costing survivors hundreds of billions of dollars.

On June 17^th 2002, President George W. Bush called for expanding opportunities to homeownership, with the goal to increase the number of minority homeowners by at least 5.5 million by the year 2010[4], known as 'America's Homeownership Challenge'[5]. One of the barriers to the so-called 'minorities' was cited as a lack of access to affordable mortgage credit. People with patchy credit histories, even no incomes, jobs or assets were being approved mortgages.

These high risk borrowers are known as subprime borrowers, and those who lend to them known as subprime lenders. Mortgage lenders in the US lowered their lending standards. John Snow, the former US Treasury secretary said 'banks were getting a little loose' with their lending standards.[6]

Furthermore, in 2004, to increase market share, subprime lenders lowered their creditworthiness standards, with the number of low quality (i.e. high risk) subprime mortgages issued.[7] Rising interest rates meant subprime borrowers, mostly on adjustable interest rate mortgages could not keep up with payments, and therefore defaulted.

As soon as subprime mortgages were issued, the subprime lenders sold the loans to Wall Street, who immediately securitised the loans. This means they bundled the mortgages together, sliced and diced them and sold them to investors worldwide. These are known as mortgage-backed securities. Investors in these securities 'earn a corresponding share of the payments (of interest and principal) made by the borrowers.'[8]

When a borrower defaults on payments, their home is forfeited[9], and auctioned off, therefore some of the borrowed money is paid back to the lenders.[10] However, the falling house prices meant less money was being recouped, if any at all. When investors want to pull out their investment in an asset, they will sell that asset for money. Houses however, are highly illiquid assets. Liquidity is 'the extent to which an asset can be converted to money, quickly, cheaply, and for a known capital sum.'[11]

Investors unknowingly invested their liquid cash into an extremely high risk subprime mortgage market without knowing it, and with low creditworthy borrowers defaulting on payments, their forfeited homes highly illiquid, money has thus disappeared off the face of the financial market from falling asset prices, and some rests in the homes of places such as Memphis, Tennessee, United States of America.

This has resulted in a shortage of money in the financial markets, hence the right to call this financial crisis a liquidity crisis, similar to that of 1914, but without a World War. Central banks and the IMF have responded by injecting cash into individual banks and even entire economies respectively. I will begin by discussing the responses of the central banks to the liquidity crisis.

Central banks' raison d'etre is to provide monetary and financial stability. Monetary stability, namely stable prices, low inflation and confidence in the currency[12] is achieved with interest rate decisions, and financial stability by providing liquidity to banks in 'term auctions', where banks exchange collateral[13] for more easily tradable assets such as Treasury Bills[14].

The liquidity offered to banks has been increased since the subprime crisis in August 2007 and special schemes have been introduced by central banks more recently, which are discussed below in order to restore financial confidence[15]. Banks borrow money from central banks to manage their day-to-day cash requirements. Due to the lack of private investment and deposits that normally provide liquidity for banks to operate 'normally', the 'central banks worldwide have extended their lending facilities.'[16]

When Lehman Brothers, which was the fourth largest investment bank in the US[17] failed to be rescued by the public and private sector, the liquidity crisis struck harder than ever before because the failure of a medium-sized or large bank has a contagion effect, i.e. fears that any bank could go bankrupt.

A lack of trust ensued between banks as they feared any of them could be next, known as an increase in 'counter-party risk'[18], resulting in inter-bank lending[19] nearly freezing up altogether.[20] Basic economics can be applied here - high demand and low supply = high costs.

Therefore banks' borrwing costs rise (in the form of interest rates) and they have less access to loans, with the result of households and companies either having credit requests[21] rejected or granted at a much higher cost[22]. I will now assess the individual responses of the central banks as well as any coordinated agreements between them.

The Bank of England (the Bank) has increased the amount of liquidity available to financial institutions since August 2007, was involved in the nationalisation of Northern Rock (a building society) and in April 2008 introduced the Special Liquidity Scheme (SLS) especially for the financial crisis.

Writing in the information pack for the SLS[23], the Bank, between August 2007 and April 2008 had increased 'by 42% the amount of central bank money available to financial institutions'[24] and widened the range of accepted assets in its three-month lending operations to include the now illiquid mortgage-back securities[25].

This, by April 2008, resulted in £25bn extra liquid assets being lent to the banks.[26] The SLS, more importantly, has been introduced to allow banks to swap their illiquid assets for Treasury bills for a period of up to three years, as opposed to three months, with the result of banks being able to 'finance themselves more normally'[27], the Treasury Bills will be returned to the Bank for the illiquid assets when a swap transaction expires, meaning the long-term risk remains with the banks.[28] The SLS was expected to provide banks with up to £50bn of extra liquidity,[29] but has actually provided double that[30], which is not surprising since £90bn worth of bonds were created for the SLS[31]. Furthermore, the SLS, intended to run only until 21^st October 2008 has been extended until and including 30^th January 2009.[32]

The US Federal Reserve (the Fed), by December 10^th 2008 injected vast amounts of liquidity into the financial industry, that its balance sheet stood at $2,245bn (£1,1490bn), an increase of $1,378bn in one year[33]. Three main initiatives have emerged from the Federal Reserve:

a) The Term Auction Facility (TAF) - the TAF[34] provides funds to depository institutions against a wide variety of collateral that are normally accepted in open market operations[35], with the intention of promoting 'the efficient dissemination of liquidity when the unsecured inter-bank markets are under stress.'[36] Originally set at $20bn per auction, this was increased to $30bn per auction on 3^rd January 2008,[37] and then $50bn per auction on March 7^th 2008,[38] meaning the two TAF auctions in March had a combined liquidity value of $100bn[39]. Each auction has now reached an outstanding value of $150bn each[40] due to the worsening market conditions following the collapse of Lehman Brothers.

b) The Term Securities Lending Facility (TSLF) - the TSLF, announced by the Fed on March 11^th 2008, is similar to the Bank's SLS. It is a $200bn facility allowing banks to trade highly illiquid assets including mortgage-backed securities for Treasury Bills and 'other collateral.'[41]

c) The Primary Dealer Credit Facility (PDCF) - the PCDF[42] was effective from March 17^th 2008 enables primary dealers to exchange 'a broad range of investment-grade debt securities'[43] in exchange for credit. This lending facility improves 'the ability of primary dealers to provide financing to participants in securitization markets'[44] i.e. more liquid assets are extended to the primary dealers.

The Fed, other than introducing such schemes, also facilitated JPMorgan's purchase of the troubled investment bank Bear Stearns in March 2008, by funding $30bn to purchase Bear Stearns 'less liquid assets'[45], code for mortgage-backed securities and on September 16^th 2008 the Fed agreed to lend American International Group (AIG) $85bn.[46]

The Eurosystem, comprising the ECB and national central banks that have adopted the Euro, has also increased liquidity to banks, in October 2008 this was in excess of EUR 920bn, compared with EUR 450bn before the crisis[47]. The Eurosystem has also lowered interest rates, increased the length of maturities from three months to six months and expanded the list of collateral accepted in exchange for Eurosystem loans.[48]

Sweden's central bank, the Riksbank provided 'special liquidity assistance' in loans against collateral to Kaupthing Bank Sweden and Carnegie Investment Bank, at a 'penal interest rate', that is an interest rate higher than the norm[49]. The Banque de France has set up a long-term fund, the 'caisse de refinancement des etablissements de credit', to stimulate the financing of the economy[50].

Central banks across the globe have engaged in 'swap facilities' with the US Federal Reserve. US dollars are supplied by the Fed to other central banks including the ECB, the Bank of England, Bank of Canada, Bank of Japan, the Swiss National Bank, the Riksbank of Sweden,[51] Australia's Reserve Bank and most recently the UAE Central Bank.[52] These swap lines currently stand at around $620bn[53]. Furthermore, in line with monetary policy, central banks across the globe have made coordinated interest rate adjustments[54] in order to tackle the economic crisis that has stemmed from the current financial crisis.

The International Monetary Fund's role in the financial crisis

The role of the IMF has substantially changed since its foundation post World War II, in Bretton Woods, New Hampshire, July 1944. From 1946 to 1973, the IMF's chief role in the world economy was to manage the fixed system of international exchange rates, as agreed in Bretton Woods[55], referred to as the Bretton Woods Dollar Standard.[56] The US dollar was fixed to gold at $35 per ounce, whilst other countries fixed their exchange rate to the US dollar.

In 1973 the floating rate regime took over, the major industrial countries let the foreign exchange markets determine the value of their currencies, and the US floated its currency.The floating rate regime is still in practice today. The role of the IMF since has been threefold since 1973, surveillance, lending and technical assistance.

The IMF monitors economic and financial developments and provides policy advice to its member countries. When a country experiences balance of payments difficulties, the IMF provides loans to that country under specified conditions, and technical assistance is provided to design and improve the quality and effectiveness of domestic policy-making.

In previous financial crises, as well as the one facing us today, the IMF's role has been as a quasi-lender of last resort to countries in financial difficulty for immediate crisis control.[57] The countries can then help to refinance their economic and financial system, for example by providing loans to their banks via their central bank, as we have witnessed in developed countries recently.

Borrowers from the IMF will have a set of demands from the IMF regarding their domestic policy-making, thus technical assistance becomes mandatory. The current crisis has also called for a global financial regulator to aid in the global recovery and to prevent such crisis occurring again.

As of 27^th October 2008, the IMF's capacity to lend was approximately $250bn.[58] Countries can borrow up to 300 per cent of their IMF quota[59] but more is available through 'exceptional access'.[60] Exceptional is an understatement, as South Korea borrowed an outstanding1,900 per cent of its quota in 1997.

Gaining a loan from the IMF could be a lengthy process. At first understandings must be reached about the package, including the size of the loan, the interest to be paid, and mandatory changes to economic and financial domestic-policy. Once an understanding has been reached, the loan is disbursed after the IMF's Executive Board endorses the programme.

This has been expedited on occasion under the IMF's 'emergency financing mechanism' (EFM) when a rapid response is required, with the IMF's Executive Board reaching a decision within 48-72 hours[61]. The IMF Managing Director Strauss-Kahn announced the EFM has been activated in the wake of the current crisis.[62]

In the current turmoil, several developing countries have required IMF financial assistance. Hungary received a $25.1bn rescue package[63], of which the IMF has contributed $15.7bn[64]. This amounts to 1,015 per cent of Hungary's IMF quota, approved under the emergency financing mechanism. Also granted loans are Ukraine[65] ($16.4bn), Iceland[66] ($2.1bn), Latvia[67] ($2.4bn) and Pakistan[68] ($7.6bn), although the financial crisis only played a part of the necessity of the loan to Pakistan.

There have been calls to reform surveillance in global finance. The International Monetary and Financial Committee (IMFC) is the IMF's policy-setting body representing the IMF's 185 member states, said the IMF has a 'critical mandate to foster the multilateral cooperation needed to restore and safeguard international monetary and financial stability'[69] (emphasis added).

The IMF has conducted multilateral surveillance with two bi-annual reports it produces, the World Economic Outlook and the Global Financial Stability Report, four regional reports and regular involvement in intergovernmental meetings and committees, including the Group of Seven (G7) and most recently Group of Twenty (G20) meetings, as well as the Financial Stability Forum (FSF).

However, the IMF currently offers guidance and predictions on financial stability in the world economy, but cannot directly influence Member States and their regulatory authorities, such as the Financial Services Authority (FSA) in the UK. The IMF has direct domestic policy influence only when countries borrow money from the organisation, as mentioned supra. With a G20 summit planned for April 2^nd 2009 in London, England, French and current EU President Sarkozy and President Lula of Brazil will put forward their joint vision on the future role of the IMF.[70]

As outlined above, banks did not have enough of their own capital to cover their immediate obligations, with the inherent danger of an illiquidity problem resulting in insolvency. The Basel Committee on Banking Supervision (BCBS), established in 1988, resulted in Basel I, the round of deliberations involving national central bankers that published a set of minimal requirements for banks.[71]

The supervisory standards were introduced after the IMF, the World Bank and the US bailed out banks after the Mexican financial crisis.[72] Basel II, published in June 2004, also set out guidelines for national regulators on how much capital banks must have set aside in case of any financial shocks. This clearly has not had the desired outcome. I have raised the existence of the BCBS because Richard Dale, in 1994, was of the view that should the Basel approach prove inadequate (Basel I), 'there may eventually be pressure for the IMF to conduct formal supervisory reviews as part of its country surveillance procedures.'[73] Fourteen years later, his prediction has come to fruition.

Whether the pressure for the IMF to take up a regulatory role will come to pass remains to be seen. The IMF Managing-Director has said the fund will resist such a role and maintain its current functions to provide analysis and act as a lender of last resort.[74] Detailed breakdown of any IMF reform is unlikely to come to light until after the next G20 Summit in London.

There will most likely be a shift in power with emerging economies having a greater say (and quota) in the IMF, 'not a Bretton Woods, but a decisive shift in the old order.'[75] Calls for such a shift have lurked around since before the financial crisis really took its toll.[76] The IMF and Strauss-Kahn may have to concede that the IMF must become a global financial regulator.

Mark Weisbrot, Co-Director of the Center for Economic and Policy Research (CEPR) delivered a presentation on the IMF's role in global financial stability.[77] He is against the IMF taking a regulatory role in the global financial market. He does not believe there isa global economy, but rather a collection of national economies, and prefers each nation and region to regulate itself, as opposed to global change in regulation.

He cites ten reasons why the IMF should not be a global financial regulator. Among them are the IMF: (i) has missed the two largest asset bubbles in history; (ii) is unaccountable for its mistakes; (iii) makes incorrect economic projections and these may be politically influenced; (iv) has not shown serious efforts of reform despite repeated failures; (v) its recommended economic policies have in general, failed; and (vi) the IMF has been a champion of the de-regulated global financial flows that played a huge role in the current turmoil.

This last point is based on the IMF's support for financial globalisation and pressuring Asian countries to open up to capital inflows at the beginning of the Asian Crisis. Mark Weisbrot mockingly says the IMF is run by the US Treasury Department, signalling the US's powerful influence within the IMF.

In this essay, we have studied how the financial crisis occurred and the subsequent roles of the national central banks and the IMF. Their immediate roles revolve around the same concept, lender of last resort. The principal difference is the central banks lend directly to commercial banks or bail them out completely, whereas the IMF lends to and bails out entire economies. The larger distinction between the central banks and the IMF is their long-term roles.

The central banks have the duty now to control the economic crisis with their monetary policy, and the IMF, who do not want to be global financial regulators, should push for national and regional regulation with continued global cooperation and transparency, which they will oversee. Vast amounts of emergency liquidity has been injected into the global financial system by central banks, the World Bank, the IMF and the EU.

Longer-term liquidity has been injected into the financial system by governments, commonly termed as the bank bailouts. With the financial crisis having turned into an economic crisis, only time will tell what revolutions, if any, will occur in the global financial system to prevent such a catastrophe from reoccurring.

This will not be an easy task, as the financial system grows and become more complex by the year. Once central banks end the process of quantitative easing,[78] reform is the next step. One step forward is greater transparency in the financial system, bankers should not lie low, and the best we can do is to weather the storm and adopt the approach of 'come what come may.'[79]

Bibliography

Books

Hal S. Scott, Int'l Finance: Transactions, Policy and Regulation, (New York, Foundation Press, 2006).
Peter Howells & Keith Bain, The Economics of Money, Banking and Finance: A European Text, (3rd edn Pearson Education Limited 2005).
Ben Steil (ed), International Financial Market Regulation, (John Wiley & Sons Ltd, 1994).
Jan Dalhuisen, Dalhuisen on International Commercial, Financial and Trade Law, (Hart Publishing, Oxford and Portland Oregon 2004).

Journal Articles

Philip R. Wood, 'Legal impact of the financial crisis', (2008) 11 JIBFL, 575.
Brian McDonnell, 'Financial regulation after the storm: heavy hand after light touch', (2008) 10 JIBFL, 519.
Dr. Iwa Salami, 'The Global Credit Crunch Impact On Emerging Economies', (2008) 4 JIBFL, 201.
George Walker, 'Credit crisis: regulatory and financial systems reform', (2007) 10 JIBFL, 567.
Laurence Lieberman, 'Bear Stearns and Northern Rock: a transatlantic comparison and the potential fallout', (2008) 23(5) JIBFL, 255.
Mark Brailsford, Chris Harrison and Amrit Dehal, 'Raising Money in 2008: Part 2: Accessing the Bank of England Special Liquidity Scheme and Eurosystem liquidity provision', (2008) 955 Tax Journal, 5.
George J. Vojta, 'The Financial Standards Foundation (Bermuda) Ltd - A New Initiative in International Finance', (2003) 10 JIBFL, 394.

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The Economist Articles:

1. October 2^nd 2008:

- The buck swaps here

- Plan B

- Blocked pipes

- Closer and closer to home

2. October 9^th 2008:

- Saving the system

- Taming the beast

3. October 30^th 2008:

-So long, Prudence. We had fun but

- Unfunded mandate

4. November 6^th 2008:

- All fall down

- Reshaping the landscape

- How deep and how long?

- Over the edge

- Smouldering

5. November 13^th 2008:

- Turning Japanese

- Redesigning global finance

- Plumbing new depths

- Boring, stolid, small and safe

6. November 20^th 2008:

- Desperately seeking a cash cure

- Onward and upward

- Goodbye G7, hello G20

- The flight and the rouble

7. November 27^th 2008:

- Those reluctant Germans

- The perils of incrementalism

- Stockholm syndrome

- Plan C

- Stopping the rot

8. December 4^th 2008:

- Passive aggression

9. December 11^th 2008:

- Save yourselves

- Cracks in the crust

10. December 18^th 2008:

- Ground zero

- Banks need more capital

- Baltic brink

[1] Jamil Anderlini and Jonathan Wheatley, 'Rising stars buffeted by global storm', Financial Times, December 24^th 2008, available at: http://www.ft.com/cms/s/0/6ddcfb9e-d15b-11dd-8cc3-000077b07658.html, accessed 26^th December 2008.

[2] Bertrand Benoit et al., 'US prepares $250bn banks push', Financial Times, October 14^th 2008, available at: http://www.ft.com/cms/s/a8217a90-9980-11dd-9d48-000077b07658.html, accessed on 26^th December 2008.

[3] Ralph Waldo Emerson (1803-1882), American poet and essayist.

[4] The White House, 'Factsheet: President Bush calls for Expanding Opportunities to Homeownership', available at: http://www.whitehouse.gov/news/releases/2002/06/20020617.html, accessed on 24^th December 2008.

[5] ibid

[6] Vincent Boland, 'Snow sees loose lending standards', Financial Times, October 6^th 2007, available at: http://www.ft.com/cms/s/410a5b80-73a5-11dc-abf0-0000779fd2ac.html, accessed on 24^th December 2008.

[7] Technical Committee of the International Organization of Securities Commissions, 'Report on the Subprime Crisis - Final Report', May 2008, p.3; available at http://www.iosco.org/library/pubdocs/pdf/IOSCOPD273.pdf

[8] Peter Howells & Keith Bain, The Economics of Money, Banking and Finance: A European Text, (3rd edn Pearson Education Limited 2005), p.502.

[9] The act of taking possession of the home and putting it up for sale

[10] Who are now worldwide investors

[11] ut supra, footnote 8, p.587

[12] Bank of England, Monetary Policy, available at: http://www.bankofengland.co.uk/monetarypolicy/index.htm, accessed on 26^th December 2008.

[13] Securities or other assets

[14] As they are known in the UK and US (T-bills for short in the US) - ut supra, footnote 8, p.296.

[15] Lessons of history', The Economist, April 3^rd 2008, quote Mervyn King, Governor of the Bank of England: central banks were 'currently at the heart of efforts to restore confidence in the banking system by the provision of liquidity against assets which have proved to be highly illiquid' available at: http://www.economist.com/world/britain/displaystory.cfm?story_id=10978416, accessed on December 26^th 2008.

[16] Special Liquidity Scheme: Information, 'Central bank operations', available at: http://www.bankofengland.co.uk/markets/sls/

[17] http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=awh5hRyXkvs4

[18] Norma Cohen, 'Bank of England cuts liquidity offering', Financial Times, September 25^th 2008, available at: http://www.ft.com/cms/s/0/770d2218-8ae6-11dd-b634-0000779fd18c.html , accessed on 24th December 2008.

[19] Inter-bank lending occurs when a bank with surplus deposits (assets) lends such surplus to banks with liabilities who bid for them in order to fund their lending commitments - ut supra footnote 8, page 294. Inter-bank lending slowed down since August 2007 - The Economist, 'Woe to the banking system', September 6^th 2007.

[20] ibid

[21] For example, loans, overdraft and credit card facilities.

[22] Barbro Wickman-Parak, 'The financial crisis from a central bank perspective', speech by Ms. Barbro Wickman-Parak, Deputy Governor of the Svergis Riksbank, at the Swedish Bankers' Association annual meeting, Stockholm, 12^th November 2008, available at: www.bis.org/review/r081119d.pdf

[23] ut supra, footnote 16.

[24] ibid

[25] ibid

[26] ibid

[27] ibid

[28] ibid - ii) Credit risk stays with the banks.

[29] 'A lifeline for banks', The Economist, April 24^th 2008, available at http://www.economist.com/world/britain/displaystory.cfm?story_id=11090742

[30] Jane Croft, Jim Pickard and Peter Thal Larsen , 'Decision on Bank's liquidity scheme sought' Financial Times, September 4^th 2008, http://www.ft.com/cms/s/0/0d18ddc0-7a10-11dd-bb93-000077b07658.html, accessed on 26^th December 2008.

[31] ibid

[32] Bank of England, 'News Release - Special Liquidity Scheme' available at: http://www.bankofengland.co.uk/publications/news/2008/053.htmhttp://www.bankofengland.co.uk/publications/news/2008/053.htm; 'Raising Money in 2008 - Part 2: Accessing the Bank of England Special Liquidity Scheme and Eurosystem liquidity provision'

[33] Martin Wolf, , ''Helicopter Ben' confronts the challenge of a lifetime', Financial Times, December 16^th2008, http://www.ft.com/cms/s/0/d049482c-cb8f-11dd-ba02-000077b07658.html?nclick_check=1

[34] Established on December 12^th 2007 - Reuters, Wednesday October 6^th 2008, 'TIMELINE: Fed actions to boost liquidity', http://www.reuters.com/article/ousivMolt/idUSN1831382920080918, accessed on 26^th December 2008.

[35] The TAF extends the 'Discount Window' of the Federal Reserve, the facility that allows banks to borrow overnight, and is a form of lender of last resort. They can now borrow for up to 90 days at 0.25% interest, as opposed to the previous 1%.

[36] 'Central banks' statement in full', Financial Times, December 12^th 2007, http://www.ft.com/cms/s/ccb84dc2-a8bb-11dc-ad9e-0000779fd2ac.html

[37] ut supra, footnote 34.

[38] ibid

[39] 'With banks and hedge funds scrambling for liquidity, the Fed gets more daring', The Economist, March 13^th 2008, http://www.economist.com/finance/displaystory.cfm?story_id=10854944

[40] Federal Reserve Press Release, October 6^th 2008, http://www.federalreserve.gov/newsevents/press/monetary/20081006b.htm

[41] Federal Reserve Press Release, March 16^th 2008, http://www.federalreserve.gov/newsevents/press/monetary/20080316a.htm

[42] Announced on March 16^th 2008, Federal Reserve Press Release, effective from March 17^th 2008 http://www.federalreserve.gov/newsevents/press/monetary/20080316a.htm

[43] ibid

[44] ibid

[45]Francesco Guerrera and Henny Sender, 'JPMorgan to buy Bear Stearns for $236bn', Financial Times, March 16^th 2008, http://www.ft.com/cms/s/e2206ed2-f380-11dc-b6bc-0000779fd2ac.html, accessed 24^th December 2008.

[46] Krishna Guha, US weighs $85bn AIG rescue', Financial Times, September 17^th 2008, http://www.ft.com/cms/s/0/4b319ac8-851b-11dd-b148-0000779fd18c.html

[47] Banque de France- Eurosysteme, 'The European Rescue Plan', available at http://www.banque-france.fr/gb/publications/telechar/debats/anticrise_gb.pdf

[48] ibid

[49] ut supra, footnote 22, p.4.

[50] ut supra, footnote 47.

[51] Ut supra footnote 34, and footnote 22.

[52] December 24^th 2008, available at: http://www.gulfnews.com/business/Banking_and_Finance/10269948.html

[53] Krishna Guha and Alan Beattie, 'Central banks rally to ease market stress', Financial Times, September 29^th 2008, http://www.ft.com/cms/s/d25f9756-8e54-11dd-9b46-0000779fd18c.html

[54] Esther Bintliff, 'Sterling falls to fresh low against the dollar', Financial Times, October 9^th 2008, http://www.ft.com/cms/s/797c720e-959c-11dd-aedd-000077b07658.html

[55] Hal S. Scott, Int'l Finance: Transactions, Policy and Regulation, (New York, Foundation Press, 2006), p. 360-362

[56] ibid

[57] Martin A. Weiss, 'The Global Financial Crisis: The Role of the International Monetary Fund (IMF)', CRS Report for Congress, updated October 30^th 2008, available at: http://digital.library.unt.edu/govdocs/crs/permalink/meta-crs-10813:1, accessed on 27^th December 2008.

[58] 'Crisis Lending and the IMF', http://www.imf.org/external/np/exr/facts/crislend.htm, accessed 28^th December 2008.

[59] IMF, 'IMF Quotas', Factsheet - September 2008, http://www.imf.org/external/np/exr/facts/quotas.htm, accessed 28^th December 2008.

[60] ut supra, footnote 58.

[61] IMF Survey Online, 'Amid Crisis, IMF Emphasizes Readiness to Lend Quickly', October 9^th 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/POL100908B.htm, accessed 26^th December 2008.

[62] IMF Survey Magazine, 'World Finance Chiefs Back Action Plan to Combat Crisis', October 11^th 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/pol101108a.htm, accessed 26^th December 2008.

[63] 'Hungary gets $25.1bn rescue package', Financial Times, October 28^th 2008, http://www.ft.com/cms/s/1026656e-a553-11dd-b4f5-000077b07658.html, accessed 24^th December 2008.

[64] IMF Survey Online, , 'IMF Agrees $15.7bn Loan to Bolster Hungary's Finances', November 6^th 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/CAR110608A.htm

[65] Camila Andersen, 'Helping Ukraine Avoid a Hard Landing, IMF Survey Magazine, November 10^th 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/CAR111008A.htm, accessed on December 27^th 2008.

[66] Camila Andersen, 'Iceland Gets Help to Recover From Historic Crisis', IMF Survey Magazine, December 2^nd 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/INT111908A.htm, accessed on 27^th December 2008.

[67] IMF Survey Online, 'IMF Set to Lend $2.4 Billion to Latvia', December 19^th 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/CAR121908A.htm, accessed on 27^th December 2008.

[68] IMF Survey Online, 'Pakistan Gets $7.6 Billion Loan from IMF', November 24^th 2008, http://www.imf.org/external/pubs/ft/survey/so/2008/CAR112408C.htm, accessed on 27^th December 2008.

[69] IMF Policy Setting Body, 'World Chiefs Back Action Plan to Combat Crisis', October 11^th 2008, available at: http://www.imf.org/external/pubs/ft/survey/so/2008/pol101108a.htm, accessed December 26^th 2008.

[70] Reuters, Monday 22^nd December 2008, Brazil, EU to prepare joint crisis position for G20, available at: http://uk.reuters.com/article/governmentFilingsNews/idUKN2251166120081222

[71] ut supra, footnote 8, 530

[72] ibid.

[73] Ben Steil (ed), International Financial Market Regulation, (John Wiley & Sons Ltd, 1994), 'International Banking Regulation' (Richard Dale), p.184.

[74] Alan Beattie and Krishna Guha, 'Comparison With Bretton Woods is overblown, warns IMF chief', Financial Times, November 8^th 2008, available at: http://www.ft.com/cms/s/0/6a2ab37e-ad34-11dd-971e-000077b07658.html

[75] 'Goodbye G7, Hello G20', The Economist, November 28^th 2008, http://www.economist.com/finance/displaystory.cfm?story_id=12652239.

[76] Krishna Guha, 'IMF 'must reform to remain relevant', Financial Times, February 25^th 2008, available at: http://www.ft.com/cms/s/0/8ba0ddbe-e3ed-11dc-8799-0000779fd2ac.html

[77] October 9^th 2008, available at: http://www.cepr.net/index.php/global-financial-stability:-imf/

[78] 'Ground Zero', The Economist, December 18^th 2008 (print edition). Quantitative easing is pumping in quantity of credit rather than rather than cost of credit.

[79] From Shakespeare's Macbeth, 1564 - April 23^rd 1616.