The problem is that an importer's bank is not creditworthy enough to have the exporter's bank accept its letter of credit. The importer's bank would pay through the nose for the government guarantee to unlock this, or be forced by an executive order of its own government to provide the administrative services to allow the Government to issue its own letter of credit to the bank's customer. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
What I have in mind is that governments, through state banks or using private banks as service providers, would issue letters of credit to their importers backed not by the country itself but by this newly created IMF fund.
How is this different from current distributions? Show me. Use diagrams if necessary.
The way I see it (though I'm not expert in IMF operations): The "newly created IMF fund" is a name change called "Short Term Liquidity Facility" that was always long-termliquidity facility. This name change recognizes only pervasive, global central bank failure to control domestic cost of capital.
Since its inception, IMF distributes funds (of central bank members) through country-specific "credit facilities" --enforced by martial operations-- to governments (which authorize central bank borrowing against currency/inflationary gov.bonds) which then distributed funds among commercial banks and central bank gov.bond dealers who take profit from fees and/or arbitrageur info. Diversity is the key to economic and political evolution.
