Bailouts or Bail-Ins?: Responding to Financial Crises in Emerging Economies / Edition 1

by Nouriel Roubini, Brad Setser

Overview

Roughly once a year, the managing director of the International Monetary Fund, the US treasury secretary and in some cases the finance ministers of other G-7 countries will get a call from the finance minister of a large emerging market economy. The emerging market finance minister will indicate that the country is rapidly running out of foreign reserves, that it has lost access to international capital markets and, perhaps, that is has lost the confidence of its own citizens. Without a rescue loan, it will be forced to devalue its currency and default either on its government debt or on loans to the country's banks that the government has guaranteed.

This book looks at these situations and the options available to alleviate the problem. It argues for a policy that recognizes that every crisis is different and that different cases need to be handled within a framework that provides consistency and predictability to borrowing countries as well as those who invest in their debt.

Product Details

ISBN-13:	9780881323719
Publisher:	Peterson Institute for International Economics
Publication date:	04/30/2004
Edition description:	New Edition
Pages:	348
Product dimensions:	6.00(w) x 9.00(h) x (d)
Age Range:	18 Years

About the Author

Nouriel Roubini is an American economist. He teaches at New York University's Stern School of Business and is the chairman of Roubini Global Economics, an economic consultancy firm.

Brad Setser is an American economist and former blogger. A former staff economist at the United States Department of the Treasury, he worked at Roubini Global Economics Monitor, along with Nouriel Roubini. After leaving the RGE Monitor, Setser became a fellow at the Council of Foreign Relations, where (among other things) he was the author of the popular economics blog "Follow the Money" about global economic imbalances. In 2009, he took a position with the National Economic Council. In 2011, he moved to the United States Department of the Treasury, where he is the Deputy Assistant Secretary for International Economic Analysis.

Editorial Reviews

This is the most intelligent and comprehensive analysis yet of how the international community should respond to financial crises... It will be the definitive work on this subject for some time to come.

Barry Eichengreen

Bailouts or Bail-ins? will prove to be a useful tool for those confronting these crises, and a clear, accessible overview for those studying global markets.

Lawrence H. Summers

Bailouts or Bail-ins? is masterful. It is by far the best book written in recent years on the vexing subject of how the international community should address international financial crises of emerging market economies.

Jeffrey D. Sachs

Roubini and Setser bring valuable experience from the policymaking process to their analysis of responding to 21st century financial crises in emerging economies. Bailouts or Bail-ins? will prove to be a useful tool for those confronting these crises, and a clear, accessible overview for those studying global markets...
—Former Treasury Secretary

Lawrence Summers

It has become routine to describe International Monetary Fund aid to a country in financial distress as a "bailout," particularly of foreign creditors. This characterization was deeply misleading in most cases. But "bailing in" foreign creditors in times of crisis—having creditors contribute to financial relief rather than add to the financial problem—became one of the top agenda items in reforming the international financial architecture. It was acknowledged that any such mechanism(s) would likely reduce the flow of private capital to developing countries, but that was viewed by some as an advantage and by others as a necessary price for mitigating the economic damage and distress associated with financial crises. This thorough book reviews critically and common-sensically the extensive if somewhat specialized discussion of the issue, as well as proposals to restore financial stability after financial crises by involving private capital directly in prospective workouts—by (very) loose analogy, to create an effective Chapter 11 of the U.S. bankruptcy code for sovereign debtors.

Foreign Affairs