SOAS University of London

Ulrich Volz Co-Authors Financial Times OpEd Calling for International Liquidity Support for Developing and Emerging Market Economies during the Coronavirus Crisis

23 March 2020

Ulrich Volz, Director of the SOAS Centre for Sustainable Finance, along with colleagues Kevin Gallagher, Professor of Global Development Policy at Boston University, and José Antonio Ocampo, Professor of Professional Practice in International and Public Affairs at Columbia University, published an OpEd in The Financial Times ( 20 March 2020), arguing that the International Monetary Fund (IMF) should use its Special Drawing Rights (SDRs) to boost inter-sovereign liquidity during the coronavirus crisis.

Titled, “It's time for a major issuance of the IMF’s Special Drawing Rights,” the OpEd calls for an emergency meeting of the IMF as soon as possible for the rapid issuance of at least $500bn in international liquidity, in the form of additional Special Drawing Rights (SDRs).

More from the OpEd:

In many countries, sovereign debt repayments will be due soon, and it will be difficult, if not impossible, to raise new funds in current market conditions. It will be even more difficult for private entities in developing and emerging markets to roll over foreign currency-denominated debt in international capital markets, raising fears of large-scale financial distress, which could in turn worsen sovereign risk profiles. Problems may be compounded by a drop in commodity prices, which for many economies are a major source of foreign currency. In short, the coronavirus crisis has the potential to trigger a large-scale financial crisis across the developing world.

…International liquidity support is urgently needed. Global financial leaders should meet virtually as soon as possible to agree to swiftly put new international liquidity into the global market place. Building on the enlightened decision made by the G20 at their London meeting in April 2009 to issue Special Drawing Rights (SDRs) equivalent to $250bn, which was then quickly implemented, we suggest that the IMF issues new SDRs to the amount of at least $500bn.

The full piece may be read here.