by Calculated Risk on 10/30/2008 01:00:00 AM

From the WSJ: IMF Creates $100 Billion Fund to Aid Crisis Fight

The International Monetary Fund will offer as much as $100 billion in a new kind of loan to countries that are battered by the financial crisis ... The new three-month loans, aimed at economies the IMF judges to be troubled but basically sound, wouldn't require countries to make the often severe changes in their policies that the IMF has demanded for decades.
...
The IMF's new program, called the Short Term Liquidity Facility, would be used largely to pad a country's reserves, which could help the recipient defend its currency. But the funds could also be used to help recapitalize banks or cover import bills.

The IMF plan is its clearest recognition that its insistence on tough conditions is driving away potential borrowers that might need its help. But the new plan also puts the IMF in the position of deciding who can have money with few strings attached, and who can't.

The IMF has always required painful, some would argue too painful, changes to a country's fiscal policies in exchange for help. This is apparently true for the bailouts of Hungary and the Ukraine. This lending facility would not come with as many strings attached and might be useful for recapitalizing banks - but I'm not sure about the "defending currency" idea since that usually doesn't work.