102 Countries approached(seeking financial help) IMF: Is this a sign of bigger recession??

IMF(International Monetary Fund)received requests from 102 Countries Out of 189 members. Global financial Stability report by IMF, report given IIF, measures of IMF keen observation is helping us in understand COVID crisis. This situation shows how big the recession is. Objectives of IMF are maintaining secure financial stability, international trading, execute its activities towards Sustainable economic growth.

 During this crisis dollar denominated assets are going back to US, means FDI ( Foreign Direct Investments). Scarcity of foreign exchange reserves in emerging economies like India, Brazil, South Africa etc. Currencies are falling. Though US is the highly effected country by COVID-19, economy is strengthening because of the above reasons. In 2008 crisis also all the countries send dollars to US the same picture is showing again.
Measures taken by IMF:

• Emergency financing requests by 102 countries to IMF leads to take quick decisions, for this IMF formed RFI (Rapid Financing Instrument), RCF (Rapid Credit Facility).
• Enhancing liquidity needed globally as  lack of cash in hand drives to liquidity crisis that is why IMF took measures to enhance liquidity.
• Adjusting existing lending arrangements have done by IMF as countries required to reconstruct their economy.
• IMF provides lending capacity of $1trillon to overcome the recession by COVID-19 crisis.
• Issuing SDR(special Drawing Rights) and providing currency Swap facility.

Global Financial Stability report April 2020 - IMF:

• On 14th April,2020 IMF report shows equity prices declined by 15% to 20% across the world.
• Sharpest portfolio  flow reversal observed.
• Capital out flow lost $100billion.
• Central banks have cut rates to ease the economic fallow and protect financial stability.
• Currency swap lines extended.
• Plans designed and announced to expand liquidity provisions by at least $6 trillion.
• Restore market confidence by supporting vulnerable countries also needed close,continuous international coordination needed.
• International transactions possible if the country having US dollar, Gold or SDR (Special Drawing Rights).

Currency SWAP Facility - IMF:

• A temporary reciprocal currency arrangement between two central banks of the countries.
•  IMF handle these lines like suppose India wants US dollars to maintain exports, means to overcome foreign exchange crisis.
• For example if India wants dollars the equivalent Indian rupees should be given to US.
  
   
• These Swap Lines applicable for different countries with rules and regulations.
• Simple and casual rules for the following countries like Central banks of England, Canada, Japan, Switzerland and Europe.

• If the rules and regulations are different little tough, termed as caped swap lines.
• Caped Swap lines for the countries Denmark, Norway, Newzland, Mexico, Singapore and South Korea, the same strategy used in 2008 also.
•  Now in 2020 Reservation Bank of India seeking US for swap facility.

IMF - Issuing SDR(Special Drawing Rights):

• A supplementary foreign exchange reserve assets defined and maintained by IMF.
• SDR has some value determined by IMF and its value declined and reviewed after 5 years. 
• SDR reviewed in 2015, and in 2020 now. Based on the average of 5 currencies SDR value determined in 2015, the Currencies were US dollar, Japan - yen, European - Euro, Britan - pound, China - yuan.
• In 1969 SDR's started, no partiality, no supremacy in issuing SDR to the countries.
• Allocation of SDR according to the share in IMF of the particular country.

IIF Report (Institute of International Finance):

• By March,2020  $83 billion ran away from emerging economies.
• Increasing dollar denominated debts.
• External commercial borrowings increased In 2009 non banking debts were $6trillion according to Bank of international settlements. Now in 2020 non banking debts are $12 trillion. IIF report reflects how big crisis is going to face by world.

US dominance over IMF:

• 70% of votes  in IMF belongs to rich countries in this leading is US, so here the conditions, rule and regulation authority indirectly goes to US though IMF is a global iconic body.
• Liberal Swap facility for US favour countries and Caped swap lines for other countries this type of partiality makes the world difficult to overcome the recession.
• Quantitative easing performed by US in 2008 crisis. The same step US ready to take in COVID-19 crisis too.
• US opposing SDR as it has beneficial measure of Currency Swapping.
• In issuing SDR also US hand 70% of IMF voting belongs to US and its friendly countries.

Final word: 
IMF have the rights to issuing SDR and using SDR most of the countries overcome the crisis if they used in right way. But here the situation is US dominating IMF and opposing issue of SDR. If Swap facility used by countries US get benefits as US dollar is international reserve currency. Global cooperation needed among the countries, supremacy, competition, partiality may not useful to overcome recession.