Regional Financial Arrangements (RFA) and Cooperation with the IMF
In recognition of the evolution of safety net arrangements, RFA development and co-operation with the IMF has been re-invigorated as a topic for the IFA Working Group to consider in 2013. This work will build on the achievements from the IMF and G20 focus on RFAs in 2010 and 2011. At the Cannes Summit in November 2011, Leaders agreed “on common principles for cooperation between the IMF and Regional Financial Arrangements, which will strengthen crisis prevention and resolution efforts.” Further, Leaders agreed to “further strengthen global financial safety nets in which national governments, central banks, Regional Financial Arrangements (RFAs) and international financial institutions will each play a role according to and within their respective mandate.” This sentiment was also reiterated in Los Cabos in June 2012, where G20 Leaders “recognize the importance of effective global and regional safety nets.”
Given recent events, such as the recent European experiences and developments in the Chiang Mai Initiative Multilateralisation, it may be timely to reflect on the scope for further development of RFAs and improving the coordination with the IMF. In October 2012, the Republic of Korea circulated a non-paper suggesting that further work in 2013 could focus on four issues related to RFAs: 1) examining the scope for further developing RFAs; 2) establishing a channel for regular dialogue between RFAs; 3) providing directional guidance for improved co-operation between the IMF and RFAs (such as in moving towards a more structured approach by developing “Guiding Principles”); and 4) examining whether the IMF or RFAs should consider introducing IMF-RFAs joint precautionary credit lines in the medium term.