The succession of financial crises in emerging markets since the mid 90’s raised awareness about the specific risks posed by financial globalization for a number of countries. This realization prompted an intense debate on the reform of the international financial architecture, and various far-reaching proposals have been discussed over the last decade in both academic and official circles. More often than not, this debate has revolved around the extent to which emerging markets crises have been primarily a result of failures in international financial markets or of mistaken policies.

Those stressing the importance of market failures have advocated for the creation of a meaningful official financial safety net articulated around the IMF acting as a pseudo-lender of last resort (Fisher, 1999). In turn, those stressing the importance of policy failures have prioritized the need to avoid distorting the incentives of both sovereign borrowers and private lenders, placing moral hazard at the centre of the discussion. Eventually, the debate has tended to result in the adoption of difficult compromises between the two camps, of which the Prague Framework for crisis resolution is a good example. According to this framework, adopted by the international community in 2001, liquidity crises ought to be resolved by combining limited and predictable official assistance, catalysis of private capital flows, and private sector involvement.