This 2009 Article IV Consultation highlights that the Lithuanian economy is undergoing a severe adjustment, after years of rapid economic growth and financial integration. With the global financial crisis, the unwinding of the imbalances accumulated during the boom has led to a sharp economic...

This paper discusses a request from the Republic of Latvia for a Stand-By Arrangement. The Latvian authorities are launching a decisive economic reform program and are seeking substantial international financial assistance to quell the crisis. With international reserves falling precipitously...

This paper studies the liquidity effect in the environment of a currency board. Under such an environment, the endogeneity issue common to other monetary regimes does not arise, thereby allowing for a straightforward analysis. Using daily data from the interbank market in Lithuania, we estimate...

This paper discusses operational aspects of official emergency liquidity support to individual institutions under stress. It argues that properly designed lending procedures, clearly laid-out authority and accountability, as well as disclosures rules, will promote financial stability, reduce...

This paper seeks to draw lessons from the IMF’s experience in handling financial crises around the globe over the past ten years that are relevant to the challenges faced by countries in Latin America, especially in the wake of the recent crisis in Argentina. Experience suggests that...

Until recently, Croatia's economic performance was the envy of many countries in transition: a successful stabilization effort in late 1993 was followed by virtual price stability and real GDP growth of 6 percent a year during 1994–97. Monetary tightening, the weak economy, and a...

Following a two-year long recession, a gradual recovery of St. Kitts and Nevis’ highly indebted economy is under way. The government has shown remarkable resolve in pursuing fiscal consolidation. Notwithstanding the fiscal adjustment, a comprehensive and timely public debt restructuring...

The currency board (Convertibility) collapsed between December 2001 and January 2002, after almost 11 years in force. The trends leading to the meltdown continued in the following months, plunging half of the population into poverty and one third into extreme poverty. Only six months later, the...

The paper compares the credibility of currency boards and (standard) pegs. Abandoning a currency board requires a time-consuming legislative process and an abolition will thus be previously expected. Therefore, a currency board solves the time inconsistency problem of monetary policy. However,...