This is a post-peer-review, pre-copyedit version of an article published in Open Economies Review. The final authenticated version is available online at: https://rdcu.be/MedS.

Laurissa Mühlich and Barbara Fritz: Safety for Whom? The Scattered Global Financial Safety Net and the Role of Regional Financial Arrangements, in: Open Economies Review (2018).

Abstract

"The global financial safety net has undergone fundamental changes since theglobal financial crisis. The IMF introduced new facilities at the global level, newregional financial arrangements (RFAs) were created, and bilateral swap agreementsemerged as a new element. In this paper, we ask how these changes influence the use ofRFAs. We create a database with all the cases in which a RFA member drew on one ofthe elements of the global safety net. This allows us to analyze which other options thecountry had at hand and how their respective volume, timeliness, and policy condi-tionality affected their use. We find today’s global financial safety net to be not a globalbut a geographically and structurally scattered net with unequal access for threedifferent groups of countries. Small countries can draw on their RFA. Only fewcountries can count on a bilateral swap line. The majority of the countries in oursample do not have several options to choose from. They have the IMF as their onlysource. We find that volume alone does not explain why countries choose a certainsource of emergency liquidity. Even if Bthe big new^ voluminous swap arrangementsreplaced RFAs in some cases, we find a complex pattern of complementary andsubstitutive use of the regional and other elements of the global safety net."

Keywords

Global financial system, Global financial safety net, Regional financial arrangements, Financial crisis, Liquidity provision