The International Monetary Fund is proposing to create a new lending instrument aimed at boosting liquidity in well-run countries hit by financial contagion, but nations like Italy would most likely not be eligible, according to officials.
The proposal could be coupled with a plan to create billions of dollars by issuing “special drawing rights” (SDRs), a form of reserve asset used by the IMF, to boost global liquidity.
IMF staff circulated a proposal last week that would allow countries to rapidly access short-term loans of around six months if they were “crisis bystanders” during financial turmoil – a category which would likely not include Italy.