Ch 15 International Financial Crisis

Question 1

Heavily Indebted Poor Countries Initiative

Answer 1

A plan initiated to reduce the debt owed by the world’s poorest countries to multilateral lenders (linked debt reduction to two-stage conditionality process

Question 2

Hot money

Answer 2

Financial capital held in short-term instruments that can be quickly liquidated at the first sign of financial trouble

Question 3

Moral hazard

Answer 3

A consideration that arises when banks believed that the government will bail them out if they suffer large losses on the loans they have made.

Question 4

Paris club

Answer 4

Its primary goal is to negotiate the rescheduling of debts from nonmember governments to the 19 permanent members

Question 5

MDRI

Answer 5

Provides full forgiveness of all debt to multilateral lenders for eligible countries