The paper lays out an analytical framework for understanding crises in emerging markets based on examination of stock variables in the aggregate balance sheet of a country and the balance sheets of its main sectors (assets and liabilities). It focuses on the risks created by maturity, currency,...

This paper sets out general principles for the design of financial stability frameworks, starting from an analysis of the objectives and tools of financial regulation. The paper then offers a comprehensive analysis of the costs and benefits of the two main models that have emerged for modern...

We explore a model intended to capture the interaction between exchange rate policy, fiscal policy, and outright default on foreign-currency denominated debt. We examine how the exchange rate affects the supply of short-term debt facing the government. We show that under a credible hard peg...

This paper shows that extending the convertibility guarantee of the traditional currency board to a second reserve currency brings about an automatic, market-driven change of the peg when the initial reserve currency appreciates beyond a specified level. The “dual” currency board thus...

The emerging European economies have been converging rapidly towards the more advanced European economies in recent years. However, large external imbalances in parts of the region have raised questions about sustainability and concerns about vulnerabilities. Empirical evidence in this paper...

St. Vincent and the Grenadines’s financial system has been largely unaffected by the global financial crisis. The report examines St. Vincent and the Grenadines 2009 Article IV Consultation and request for Disbursement under the Rapid-Access Component of the Exogenous Shocks Facility. The...

The article is a review on Djibouti’s Extended Credit Facility (ECF) program and the performance of economic development in the program. The ECF program helped Djibouti to maintain macroeconomic stability, and the period underwent a transformation in the Djiboutian economy. The country...