Marginalisation of Multilateral Crisis Finance?
Since the 2007-8 Global Financial Crisis (GFC) the Global Financial Safety Net (GFSN) has both significantly expanded and diversified. This has seen a steep decline in the IMF’s share of international liquidity crisis funding capacity, which also includes Bank Swap Arrangements (BSAs) and Regional Financial Arrangements—such as the European Stability Fund (EDF) Ching Mai Initiative Multilateralisation (CMIM) and the BRICS Contingency Reserve Arrangement (CRA – Table 1).
These changes followed rapidly from the collapse of Lehman Brothers in September 2008 when it became clear that the IMF had neither the financial capacity nor the ability to act sufficiently rapidly to meet the scale and urgency of the global dollar liquidity deficit (Doher 2020). The Federal Reserve (Fed) in contrast, was able to act at the required scale and speed through BSAs (Pape 2021). The moves by the Fed were followed by a proliferation of BSAs (see Bank Swap Arrangements) and the expansion of RFAs (see Regional Financial Arrangements) during the GFC that carried through the subsequent European and Covid19 crises.
As a direct result of the above, the IMF’s share of overall international liquidity crisis funding capacity declined from 83.3% in 2007 to 25.5% in 2023, while RFAs increased from 7.7% to 34.5%. and BSAs from 9.0% to 40.3%.[i] Though this significantly under records the importance of the BSAs (see Bank Swap Arrangements).
The decline in the IMF share must be seen in the context a trebling of its funding capacity (from US$0.33tr in 2007 to US$1.0tr in 2023)[ii] , though this has increasingly involved borrowing rather than quota contributions.[iii] This is a reflection of both the scale of recent crises and the failure of the USA to ratify the 50% increase proposed in 2023; principally because it would involve moving member contributions and voting power closer to their relative GDP, increasing the influence of, in particular, China and India, at the expense of the USA.
Despite the decline of the IMF’s share of crisis funding, the overall expansion of the GFSN has more than kept pace with the growth of global GDP, debt and financial assets.[iv] This reflects the expansion of IMF, RFA and BSA funding from US$750bn in 2007 to US$4.5tr in 2023 being accompanied by increased levels of national self-insurance through a dramatic rise in the level of Central Bank Reserves (CBR) from US$4.0tr to US$14.6tr.
However, there has been a substantial increase in the level and range of risks. While at present concerns rightly focus on the risks inherent in the present global situation, these must also be seen as exacerbating longer-term concerns. For example, the increase in public debt to GDP ratios, combining with higher interest rates and slower growth to increase the risk of sovereign debt distress and limit governments’ fiscal space to respond to future shocks. Such concerns are being reinforced by the rise of new systemic risks. These include: The growing role, leverage, and interconnectedness of Non-Bank Financial Institutions (such as hedge funds and investment funds), entities that are less regulated than traditional banks where liquidity mismatches could amplify market shocks; or the increasing reliance on technology, third-party service providers, and AI that have introduced new operational and cybersecurity risks to the financial system (Bank of England 2025; Kane 2025).[v] Though there is growing awareness of these new systemic risk and significant steps are being taken at the corporate, national and regional levels – notably by the EU and ASEAN – to guard and regulate against them.
However, it is scarcely scaremongering to suggest that the GFSN funding available is far from adequate for anything like a repeat of the GFC (Boston University 2024; IMF 2025).[vi] A prospect that is magnified by concerns over the coordination of responses, given the changed position of the IMF (see below) and significant shifts in the geopolitical situation from that prevailing during the GFC, the Euro Crisis and the Covid19 Pandemic. It is now far less conducive to the sort of multilateral action and international cooperation that were critical -though far from simple to operationalise – during the GFC and the Covid19 Pandemic. With a critical role being played by the G20, the position of which seems to have weakened, though it was always stronger on immediate single issues of broad concern.
While the reduced share of the IMF in crisis funding also limits the ability to leverage further funding, coordinate responses, and impose remedial measures through conditionalities.[vii] Here the IMF carries significant baggage. For while IMF programmes have undoubtedly been significant in containing major crises and, to a degree, lessening the chances of replication. However, they frequently came at high economic, social and political costs to the countries concerned, which in many cases went beyond what was necessary to restore stability in the interest of pushing neoliberalism; initially under Structural Adjustment programmes and later under the group of political and economic policies that comprised the Washington Consensus. Policies, which from the early 1980s onwards caused considerable resentment of the IMF and its policies in the GS. This has made many countries highly receptive to the establishment of alternatives to IMF crisis funding, which prior to the GLC rested almost entirely on a handful of BSAs and series of small RFAs (TABLE 1).
However, while diversification away from the IMF has given some countries, particularly the wealthier ones,[viii] easier and perhaps less onerous access to funding, it has not made the GFSN more equitable or effective (Fritz and Goda 2024). While there has been some increased coverage in the GS, with an increased share of BSAs, CBRs and RFAs, this is heavily concentrated in East Asia and access to funds remains very uneven. More generally, for poorer countries, outside of RFAs and lacking either the assets or strategic importances to establish BSAs, there is little alternative to the inadequate and often unpalatable IMF funds.
The shift in funding away from the IMF has placed the decision to fund and impose what conditions (if any) in the hands of a small number of central banks and regional funds. Though, the IMF retains some measure of control over the RFAs (see RFAs and the IMF), it has little or none over BSAs, which in turn lack any formal coordinating mechanisms. There has in effect been a major transfer of power away from the IMF and into the hands of a small number of central banks, most strikingly the Federal Reserve, which is little more popular in the GS than the IMF—a reflection of the international impact of the Fed’s often abrupt policy shifts and the geopolitical basis for much of its financial assistance, long before the GFC.
Overall, the GFSN has become more complex, multilayered and decentralised with significant issues of coordination across and between the layers. While, as noted below, the IMF is making efforts to increase coordination, it’s reduced role must be seen in terms of a wider US-led retreat from multilateralism; against which must be set the expansion of supplementary and potentially alternative international organisations, such as the BRICS, G20, New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB) and related bodies. But as yet there is no sign of anything that could supplement, let alone replace, the IMF with its still near universal membership, and position as a central part of the international financial architecture.
Regional Financial Arrangements
RFAs linked to regional bodies date back to the mid-1970s.[ix] Their formation reflecting the uncertain economic conditions, recurrent crises and the lack of international crisis management funding until the reformatting of the IMF from 1980. Subsequently, RFAs were sidelined by IMF funding and conditionalities, until the 1997 Asian Financial Crisis (AFC). In the wake of which, RFAs made a resurgence which reflected the build-up of discontent in the GS over IMF programmes. This was reinforced in East Asia by the IMF and the USA vetoing the Japanese proposal to manage the AFC through a regional fund and the subsequent experience of conditionalities. These experiences led directly to the 2000 development in of the ASEAN Swap Arrangement (ASA) into the ASEAN+3-based Ching Mai Initiative (CMI) – and the general adoption of CBR building policies in East Asia).[x] This CMI was openly presented as an alternative to the IMF—and was seen by members as the starting point for the construction of an independent Asian Monetary Fund. As such, the formation was initially opposed by the IMF and USA, but agreement was reached on the recognition of the CMI providing lending beyond 30% of a member’s quota and related programmes were subject to IMF approval.[xi] While it became clear that this was regarded by CMI as an interim measure, recognition of the CMI was an important move that was to be significantly built on in the context of the GFC.
Key developments prompted by the GFC included: the formation of the European Financial Stabilization Mechanism (EFSM) in 2009; the transformation in 2010 of the CMI from a BSA base to a contributary fund (CMIM) with its resources doubled to US$240 billion and the level of lending without IMF approval increased from 30% to 40%; the BRICs establishing their own multilateral Contingent Reserve Arrangement (CRA) in 2014 with total committed resources of US$100 billion (and the same initial lending limit as applied to the CMIM); while in 2012-13 the members’ contributions to the Arab Monetary Fund (AMF) and the Latin American Reserve Fund (FLAR) almost doubled.
However, it must be stressed that although the AMF and FLAR have significant experience of small-scale lending, evaluation and monitoring, only the European Funds have dealt with the funding and management of major crises in close cooperation with the IMF.[xii] Though, while yet completely untested, the BCR and even more the CMIM, have developed considerable capacity in monitoring and policy formation. Particularly significant is the development of the ASEAN+3 Macroeconomic Research Organization (AMRO), which has been accompanied by the establishment of regular meetings and exchange of information between the members’ Central Banks and Finance Ministries. It is also important that to note that the CMIM fund is supported by a separate set of BSAs with the PBoC and BoJ (which has an unlimited permanent BSA with the Fed – see below). While ultimately there is the underpinning of the CMIM members’ reserves of some US$ 6tr.
The IMF and the RFAs
Following the formation of the CMI in 2000, the IMF accepted the need for RFAs and came to recognise that their cooperation would be necessary to the handling of any major global crisis (IMF 2016). While also accepting that RFAs were more suited to localised, less complex liquidity crisis and in many cases more acceptable to the countries concerned. Recognising that “some countries hesitate to seek IMF support in a timely manner, partly due to the stigma and policy conditionality associated with Fund programs” (IMF 2025: 23). For these reasons the IMF has come to devote significant effort to maintaining good relations with the RFAs, despite most of them having been principally set up to act as alternatives to the IMF, in some cases as a direct response to the experience of IMF loans and conditionalities.
Since 2016 the IMF has jointly organised the annual the High-level RFA Dialogue, which also includes the G20 International Financial Architecture Working Group (G20 IFA WG). These meetings have become an important element in IMF interaction with the RFAs and increasing cooperation between the RFAs. The latter is evident in the frequency of meetings and workshops that seek to share best practice, particularly with respect to surveillance and policy formation. In these, the ESF has come to play a major role. There is here a potentially important set of interactions involving the BRICS, G20 and the IMF, which cuts across the emerging Western / GS divide.
Bank Swap Lines (BSAs)
Immediately prior to the GFC there were a handful of long-term swaps in place, such as those that formed the ASA.[xiii] In general, BSAs were limited and temporary arrangements, mostly utilised to manage currencies. However, this was to change rapidly with the breaking of the GFC. With the Fed establishing two swap lines in December 2007,[xiv] and 14 more in 2008 following the collapse of Lehman Brothers. Five of these were unlimited and permeant,[xv] and the other nine[xvi] on a renewal basis, providing a major support system for the international financial system, but heavily weighted towards the West and its closes allies.
While the Fed remains a dominant player in terms of the volume and importance of its BSAs, there has been significant diversification with the BoJ, ECB and, above all the PBoC becoming significant players. By 2023 there were some 160 BSAs in place, of which the PBoC had over 40[xvii] (see Geopolitics of BSAs). Though it must be stressed that the number and, even more, the value of BSAs, is significantly, underestimated. This reflects both the values assigned to the five unlimited Fed-based on activation history, and general underreporting of arrangements.[xviii] While the latter includes many small and temporary agreements, it is the case that even major arrangements are simply not in the public domain, even when they are activated.
Geopolitics of BSAs
The rise of BSAs has, as was noted above, shifted power away from the IMF, into the hands of a small number of central banks and thereby governments, which can (and do) arrange and activate the BSAs they control on geopolitical lines. This has been particularly evident with respect to the USA and the Fed, which narrowly focuses on countries with close political alignment with the US and those with higher holdings of US dollar assets. In April 2026 there were signs of a more proactive development of this, with proposals to establishment a BSA with the UAE and perhaps other Gulf States and selected states in East Asia.[xix]
In contrast the rapid expansion of BSAs by the PBoC is closely linked to the internationalisation of Chinese business, banking, investment (not least with respect to infrastructure through the BRI), active roles in the CRA, NDB and AIIB, the development of cross-border payment systems and the promotion of the use of the Renminbi (RMB). There is here for some in the GS an alternative to the dollar-centric system, but, as with the USA, ties them to China.[xx] This has been particularly commented on with respect to Pakistan, where reliance on Chinese swap lines has tied its financial stability closely to Beijing.[xxi]
In essence, while central bank swap lines are powerful tools for managing financial stability, their deployment is deeply intertwined with broader geopolitical strategies and power dynamics, shaping the structure of the global financial architecture.
Further fragmentation?
Since 2006, the GFSN has evolved from a relatively simple structure in which international financial crisis funding was dominated by the IMF and generated through the member quotas. It is now massively larger, with multiple layers of funding that individually rival and, in total, greatly exceed, those of the IMF. The resultant decentralisation has created major issues of coordination across and between the layers.
The changes reflect the extent to which the GFC revealed that the IMF dominating the GFSN has become out of phase with the scale, speed of operation and connectivity of the global financial system. As these changes emerged, they received significant support from countries, particularly in the GS that were greatly discontented with the IMF system, its conditionalities and the lack of significant reform of governance and policies, not least due to US opposition.
While the GFC forced change, the IMF has both recognised that this was necessary and that much more is needed, calling for the development of “a more robust, predictable, and inclusive GFSN, better suited to address modern, interconnected systemic risks” (IMF 2025: 179);[xxii] though, under current conditions, it is not immediately clear how this might be achieved, given US opposition, the interest of the new players in the GFSN and significant divisions within the membership of the IMF. This is reflected in the failure to agree a communique in any of the bi-annual meetings since 2021, and was particularly notable, given global circumstance, at the most recent, held between 15-18 April 2026 in Washington (IMF 2026).
Indeed, all the tendencies point to a greater fragmentation and diversification of the system. The number of BAS continue to increase and diversify, membership of RFAs is increasing (BCR and FLAR), or under discussion (CMIM), and other Arrangements have been proposed (African Liquidity and Stability Mechanism).[xxiii] While the IMF promotes the accumulation of CBRs and the use of Multilateral Development Bank (MDB) stabilisation loans (MLBs) and bringing them into the GFSN.[xxiv] Although the MDB funds would be welcome, they would add another layer to the GFSN, adding further issues of complexity and coordination.
More generally, the fragmentation of the GFSN must be viewed in the context of the gradual erosion of both multilateralism and the domination of the international financial system and its key infrastructure by the USA and its currency. With the fallout from the wars in Ukraine, Iran, and the wider Middle Eastern conflicts seemingly set to intensify and perhaps accelerate, heralding major changes in both the international financial architecture and the international order. The more immediate question is that if the current Iran conflict tipped the world into a full blown systemic financial crisis, would the disparate parts of the GFSN come together in a unified response, as in 2007-8, or diverge into a complex pattern of responses across BSA networks, the IMF and RFAs, with BSAs operating along geopolitical lines and perhaps some RFAs acting independently of the IMF.
Table 1: Regional Financial Arrangements 2023
Endnotes
[i] Figures based on IMF 2016 and 2025.
[ii] This included a doubling of quotas in 2010 and a special issue of SDR650bn. in the context of the Covid 19 pandemic.
[iii] The borrowed share increased form 16.7% in 2007, and 55.0% in 2023- peaking at 69.4% in 2014.
[iv] The rapid rise in CBRs from 2005 peaked in 2020-21 before levelling off.
[v] While on the risk front national economies and such groups as the EU and ASEAN are attempting to reduce risk by increased regulation of stable coins and digital assets to ensure that they are adequately backed. Less popular with the IMF (and USA) are the increasing number of countries and RFAs that are turning to local currency debt markets and diversifying reserves and payments away from US specific fiscal risks.
[vi] This was inevitable raised at the he Spring Meeting of the IMF held in Washington (15-18 April 2026), in the context of the failure to ratify the 50% increase proposed in 2023 and the cuts in programmes that are ensuing, given projections of demand for IMF assistance. Though with no sign of any progress.
[vii] See discussion of the marginalization of the IMF in Mühlich et al 2021.
[viii] Indeed, some have gained considerable financial security, particularly those with permanent and unlimited swap lines with the Fed, discussed below.
[ix] The AMF, ASA and FLAR all date from 1975-6 (see Table 1).
[x] The ASA comprised BSAs between the ASEAN Five – Indonesia, Malaysia, Philippines, Singapore and Thailand. The CMI extended this to include all 10 ASEAN countries plus China, Japan and South Korea.
[xi] No such arrangement was made with the AMF or FLAR, though both have come to report applications, loans and conditions to the IMF.
[xii] See discussion in ECB 2018.
[xiii] The Fed had one long-standing arrangement with the Bank of Canada (BoC) and following the 11 September 2001 attack established three temporarily (30 day) arrangements. These comprise an expansion of the BoC arrangement and new ones with the ECB and BoE (French 2023).
[xiv] With the ECB and Swiss National Bank.
[xv] Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank.
[xv] The PBoC swaps are both heavily directed at the GS and can be applied to trade, balance of payments.
[xvi] Reserve Bank of Australia, Banco Central do Brasil, Danmarks Nationalbank, Bank of Korea, Banco de México, Reserve, Bank of New Zealand, Norges Bank, Monetary Authority of Singapore, Sveriges Riksbank.
[xvii] Now over 80.
[xviii] There is no comprehensive list (the best is the University of Boston, Global Financial Safety Net Tracker Database, https://www.bu.edu/gdp/global-financial-safety-net-tracker/).
[xix] Treasury Secretary Scott Bessent statement to Senate Appropriations subcommittee hearing on 22 April 2026. He argued that this would support American interests, including protecting the use of the US dollar and discourage allies from turning to alternative payment systems, such as the Chinese yuan (US Department of the Treasury 2026).
[xx] The PBoC swaps are both heavily directed at the GS and can applied to trade, balance of payments and debt servicing, as well as liquidity shortage.
[xxi] See Koosakul and Miksjuk (2024) on the geopolitics of the establishment of BSAs by the PBoC and the Fed.
[xxii] See also discission of IMF reform by Mühlich et al 2023 and Colodenco et al 2025.
[xxiii] This was proposed in 2022 but has yet to gain traction.
[xxiv] See Vinokurov and Levenkov (2021) for a discussion of how these are becoming the fifth component of the GFSN.
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