Governments asking for International Monetary Fund assistance do not necessarily suffer the “stigma” of adverse bond market reaction, a working paper published by the European Central Bank finds.
In Stigma? What stigma? A contribution to the debate on financial market effects of IMF lending, Beatrice Scheubel, Andrea Tafuro and Benjamin Vonessen focus on sovereign refinancing costs. This approach, they argue, captures “those developments which might deter policy-makers from approaching the IMF”