The role and suggested functions of an ILLR in a crisis are like a domestic lender of last resort but one at an international level that can bail out one or several countries.
While no comprehensive mechanism has been implemented, in late 1997 the International Monetary Fund instituted the supplemental reserve facility (SRF), designed to make large short-term loans with policy conditions at penalty rates during crises.
Finally, having an ILLR with established rules and procedures in place before a crisis might make collective action problems less likely than in the case of an exclusively ex post response.
[2] The role and suggested functions of an ILLR in a crisis like domestic lender of last resort, as set forth by Walter Bagehot and subsequent authors, are the following: i) lending against any marketable collateral (finance) valued at its value in normal times; ii) lending in large amounts (on demand) at terms steeper than at market terms in normal times; and iii) establish the above principles ex-ante and applying them automatically.
[3] Less consensus exists on whether an ILLR should additionally assume the functions of a crisis manager by coordinating the responses of other relevant actors.
That liquidity would in turn be drawn from a network of Central Bank swaps and other reliable sources, including regional arrangements in a position to co-finance and committed to fulfilling their obligations.