With policy innovation amid COVID-19, the Fed has led. The IMF also needs to think big. To that end, here is a proposal for a new IMF Systemic Liquidity Facility (SLF) to expedite assistance to emerging markets with strong policies preceding the crisis: https://web.stanford.edu/~rtoloui/IMF%20Systemic%20Liquidity%20Facility%20Proposal.pdf

SLF uses market-based risk measures to qualify countries AND calibrate how much they can borrow. This enables IMF funds to be disbursed rapidly, equitably, and responsibly.

As example, Indonesia would be eligible to borrow about $16B under the SLF. Supplementing Indonesia’s existing FX reserves of ~$120B, that represents a meaningful addition to its first lines of financial defense.

SLF’s objective criteria reduce influence of political/bureaucratic factors; sliding-scale of access eliminates the “cliff” of qualify/no qualify decision; short repayment term & surcharge interest rate encourages use for emergency needs only.

SLF would only be part of an expanded IMF toolkit. Separate initiatives needed for more financially vulnerable and lower-income countries. More support may ultimately be needed, but early steps like SLF can prevent more damage later...sound familiar?