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The Global Financial Safety Net (GFSN) has expanded considerably since 2008, including in the non-traditional elements of the safety net such as Regional Financing Arrangements (RFAs). The resulting multi-layered structure of the GFSN makes collaboration between its various elements more important than in the past. Specifically, stronger collaboration between the Fund and RFAs would help increase the effective firepower of the GFSN and ensure a timely deployment of resources. The Fund’s experience in macroeconomic adjustment and its universal risk pooling would combine with the greater regional knowledge and country ownership brought the RFA. In this way, improved collaboration between the Fund and RFAs, including in co-financing, would significantly reduce the risk of contagion by encouraging countries to seek early assistance from the Fund. This paper is part of a broader set of proposals to fortify the GFSN (IMF, 2017b, c, d). It proposes both modalities for collaboration—across capacity development, surveillance, and lending—and some operational principles to help guide future co-lending between the Fund and the various RFAs. To date, the only operational guidance to facilitate collaboration has been limited to the high-level 2011 G20 Principles for Cooperation between the IMF and RFAs. Building on several case studies and the principles derived from them, this paper proposes an operational framework for future engagement. It aims to start a more structured dialogue between the Fund and individual RFAs on the modalities of how best to work together.

"The changing contours of the global economy and the rapid transformation of the global financial safety net (GFSN) have strengthened the case for more structured collaboration between its different layers, particularly with Regional Financing Arrangements (RFAs). RFAs have become an important part of the GFSN, and their roles have also evolved. Over recent years, their coverage has expanded to encompass many major advanced and emerging market economies; the resources under their control has risen. Moreover, since the global financial crisis, some RFAs have become key financing counterparts of Fund-supported programs. These developments have heightened the importance of close and timely collaboration with RFAs. However, there is currently no formal framework for an exchange of Board documents with RFAs, leaving a gap in Fund collaboration with RFAs. The Fund has a long-standing practice for collaborating and sharing documents with other international organizations, primarily under the Transmittal Policy that was amended most recently in November 2017. However, some RFAs do not meet the criteria under the Transmittal Policy and, in view of the unique and heterogeneous institutional and governance structures of RFAs, there is a need for a dedicated and coherent framework that facilitates the exchange of documents on both routine and non-routine bases. This paper proposes a policy framework for the exchange of documents between the Fund and RFAs. The proposed framework establishes a set of criteria to be met by RFAs for document exchange—based on the consideration of whether a certain entity shares common operational interest with the Fund, and provides satisfactory confidentiality and reciprocity assurances. Under routine document sharing arrangements with RFAs, Board documents would be provided after Board consideration. In cases of UFR arrangements involving current or potential co-financing by the Fund and RFAs, or Policy Coordination Instruments (PCIs) and Policy Support Instruments (PSIs) that may help unlock RFA financing to the country, staff proposes that relevant Board documents be exchanged prior to their consideration by the Board, following notification to the Board. The proposed framework builds on the principles of the Transmittal Policy and does not impact the transmittal of documents to international organizations currently governed by the Transmittal Policy."

This joint staff paper sheds light on the existing cooperation between the IMF and RFAs and suggests further avenues to enhance their work together. It offers a collective RFA reply to the IMF's recent policy paper on collaboration issues. The last global financial crisis made clear that the International Monetary System (IMS) needs strong financial backstops to provide crisis-time liquidity to countries hit directly by large economic shocks or affected by crisis contagion. In this context, the Group of Twenty (G20) most-developed economies urged at the height of the crisis that the so-called Global Financial Safety Net (GFSN) be strengthened. The GFSN refers to the different layers of resources for crisis prevention and resolution, which come mainly from (i) international reserves held by national central banks, (ii) bilateral swap arrangements between central banks (BSAs), (iii) Regional Financing Arrangements (RFAs), and (iv) the International Monetary Fund (IMF). Policymakers tried not only to increase the overall resources in the safety nets but also to enhance the coordination among different layers, thereby facilitating the effective use of resources and mitigating moral hazard risks.

Following the global financial crisis of 2008-09, regional financing arrangements (RFAs) have been recognized as an important layer of the global financial safety net. This paper summarizes the current landscape of RFAs, and discusses IMF-RFA coordination to date and options for enhancing cooperation going forward. In so doing, it intends to contribute to discussions underway at international fora and solicit views from the Fund and RFA memberships on how to enhance cooperation.

The changing contours of the global economy and the rapid transformation of the global financial safety net (GFSN) have strengthened the case for more structured collaboration between its different layers, particularly with Regional Financing Arrangements (RFAs). RFAs have become an important part of the GFSN, and their roles have also evolved. Over recent years, their coverage has expanded to encompass many major advanced and emerging market economies; the resources under their control has risen. Moreover, since the global financial crisis, some RFAs have become key financing counterparts of Fund-supported programs. These developments have heightened the importance of close and timely collaboration with RFAs. However, there is currently no formal framework for an exchange of Board documents with RFAs, leaving a gap in Fund collaboration with RFAs. The Fund has a long-standing practice for collaborating and sharing documents with other international organizations, primarily under the Transmittal Policy that was amended most recently in November 2017. However, some RFAs do not meet the criteria under the Transmittal Policy and, in view of the unique and heterogeneous institutional and governance structures of RFAs, there is a need for a dedicated and coherent framework that facilitates the exchange of documents on both routine and non-routine bases. This paper proposes a policy framework for the exchange of documents between the Fund and RFAs. The proposed framework establishes a set of criteria to be met by RFAs for document exchange-based on the consideration of whether a certain entity shares common operational interest with the Fund, and provides satisfactory confidentiality and reciprocity assurances. Under routine document sharing arrangements with RFAs, Board documents would be provided after Board consideration. In cases of UFR arrangements involving current or potential co-financing by the Fund and RFAs, or Policy Coordination Instruments (PCIs) and Policy Support Instruments (PSIs) that may help unlock RFA financing to the country, staff proposes that relevant Board documents be exchanged prior to their consideration by the Board, following notification to the Board. The proposed framework builds on the principles of the Transmittal Policy and does not impact the transmittal of documents to international organizations currently governed by the Transmittal Policy.'.

Since the global financial crisis, the Global Financial Safety Net (GFSN), traditionally consisting mainly of countries' own foreign exchange reserves with the International Monetary Fund (IMF) acting as a backstop, has expanded significantly with the continued accumulation of reserves, the sharp increase of swap lines between central banks, and the further development and creation of new Regional Financing Arrangements (RFAs). RFAs have expanded, reaching an aggregate size comparable to that of the IMF and becoming an integral layer of the safety net. Enhancing the cooperation between the IMF and RFAs so that they play complementary roles in case of global distress, becomes critical in order to further strengthen the multi-layered GFSN, while paying attention to issues such as moral hazard, stigma or exit strategies in connection with IMF-RFA cooperation. This paper presents recent experience and lessons learned in IMF-RFA cooperation and proposes how to improve their future interaction.