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英国论文网:British and Dutch GDP:The spread of the cri(26)


hard-currency backing of domestic monetary aggregates does not suffer a dramatic
reduction. Both effects go in the direction of enhancing the trust of the private
sector in domestic financial institutions. Loans from multilateral development
banks, MDBs, to the region (i.e., Africa, emerging Europe and Latin America) in
2007 were slightly higher than 12% of the $324 billion required to offset the
Sudden Stop (see Table 1). Even if all the MDBs follow the World Bank’s recent
announcement, and expand lending by a factor of four, the additional funds
would raise the MDBs’ contribution to only around 50% the above amount.
Table 1 MDBs lending to Africa, emerging Europe and Latin America (US$ billions)
2004 2005 2006 2007
Africa 9.0 7.8 10.0 11.3
Emerging Europe 7.9 8.0 8.6 9.8
Latin America 14.8 17.1 17.8 20.1
Total 31.7 32.9 36.4 41.2
Note: Figures correspond to the total of approved loans and guarantees by the World Bank, the African
Development Bank Group, the Inter-American Development Bank, the Andean Development Corporation
and the European Bank for Reconstruction and Development.
An additional difficulty is that MDB loans take a long time to be approved and
disbursed. Thus, in the short run the MDBs are unlikely to be of much help. More
promising are initiatives like the Fed’s currency swaps and the IMF Short-Term
Liquidity Facility. It is essential, though, that the sums involved are large enough
and cover a wide spectrum of emerging markets.
The good news for emerging markets is that the G7 seem to have recognised
their responsibility in generating the present financial turmoil and are coming forward
with proposals to enlarge the MDBs’ lending capacity much more aggressively
than in the past. To illustrate, during the Asia/Russian 1997/8 crises the
MDBs increased lending by 30% (instead of the 400% recently announced by the
World Bank), an amount that represented less than 5% the fall in emerging market
investment (see Figure 2).
This, in addition to the recent and programmed G20 meetings, gives us hope
that emerging markets will be offered a much more adequate cushion to a potential
Sudden Stop. Optimism, however, is tempered by the fact that this time
around emerging markets will likely be bereft of the net export channel, which
played a very important role in their rebound from previous Sudden Stops. Unlike
the 1997/98 episode, during which robust growth in the US and other advanced
economies provided a strong external demand that helped the recovery in EMs,
this time the global nature of the crisis will almost surely prevent this mechanism
to take place.
Rapid and large liquidity funding for emerging markets 39
Conclusion
Our analysis strongly suggests that, in the short run, first priority should be given


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