Question

What are the advantages and disadvantages of having the IMF as an international lender of last resort?

Short answer

The reasons why many citizens are dissatisfied with the IMF's involvement are outlined in this text.

Step-by-step solution

Concept of The International Monetary Fund 

The International Monetary Fund (IMF) is an international organization that gives financial aid and assistance to developing nations, assists in the maintenance of financial stability, and encourages high economic growth and stability by increasing employment.

Explanation 

The IMF was founded as part of the Bretton Woods exchange rate regime, which designated the IMF as a lender to countries with a balance of payments deficit. Lender of last resort is another name for it.

The IMF also serves in a variety of other capacities. These are the following:

To maintain global financial stability. It encourages governments around the world to spend freely because they know they will be bailed out by the IMF if things go wrong. This safety net also generates a moral hazard issue. It enables the government to put more money into potentially riskier projects and investments. As a result, the citizens of the country may be dissatisfied with the IMF's position, as moral hazard issues could lead to financial instability in the country.