The rise of regional financing arrangements (RFAs) is exacerbating the types of moral hazard that have plagued the International Monetary Fund since its creation and action is now needed, according to new research.

Regional groups have been increasing in recent decades, from the Chiang Mai Initiative in southeast Asia to the eurozone's European Stability Mechanism (ESM) and the Fondo Latinoamericano de Reservas in Latin America. Such groups may supplement IMF lending, but they also create new