Strengthening the Global Financial Safety Net: Challenges and Prospects

The paper shares the idea on the current global financial circumstance; whereas rapid financial globalization was a basic source of the systemic risks of the global financial crisis, the world economy is even more integrated in the aftermath of the global crisis. It emphasizes the importance of the global community to strengthening the GFSN to respond to a crisis. Kim argues that the GFSN should be a multi-layered structure, and only a single layer alone would not be sufficient to handle the global crisis due to its impact of economic damage. More specifically, the paper suggests a multi-layered structure of the GFSN as follows: self-insurance with foreign exchange reserves, bilateral currency swaps by central banks, RFAs already influencing regional financial recourse and stability in several regions, and global arrangements, such as the IMF facilities.