Why has the IMF come in for widespread criticism for its handling of the Asian financial crisis?
A)It refused to make loans to any of the countries whose currencies were under speculative attack.
B)Its policies did not sufficiently punish speculators with losses, giving rise to moral hazard.
C)Its policies led to unsustainably low interest rates in a number of Asian countries.
D)Its policies failed to lead to sufficient hardship for citizens in a number of Asian countries, giving rise to moral hazard.

Question

Quizplus · Accepted Answer

The IMF has been criticized for having policies that did not punish speculators with losses, leading to moral hazard. This means that speculators felt that even if they made risky investments, they would not suffer significant losses because the IMF would intervene to bail out affected countries. Critics argue that this created a moral hazard problem where risky behavior was encouraged, and the IMF did not do enough to deter it.

Why Has the IMF Come in for Widespread Criticism for Its