The International Monetary Fund has been criticized for exacerbating moral hazard

Question

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Moral hazard arises when people behave recklessly because they know they will be saved if things go wrong. The IMF has been criticized for exacerbating moral hazard with its rescue programs. According to critics, many Japanese and Western banks made loans to overleveraged Asian companies during the 1990s, and should now be forced to pay the price for their actions. Instead, the IMF, through its rescue package, is reducing the probability of debt default and effectively bailing out the banks.

The International Monetary Fund Has Been Criticized for Exacerbating Moral