Power Of Disincentives: IMF Raise Means EU Can Hold Less Reserves?

Martin Wolf just said something that should terrify anyone who believes the EU crisis can be navigated without default.

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The other news is Wolf expects IMF chief Christine Lagarde will get her request for at least $400 billion, which would double the fund’s lending capacity.

Wolf supports the idea of the IMF having a larger insurance fund, so countries won’t need to hold as much currency reserves but thinks it should be more global in nature.

“To put it all into Europe? That looks to me like a very dangerous game for the IMF,” he says. “They’ve made quite clearly some serious mistakes getting so involved in a political project they don’t really control.”