This paper analyses the history and effectiveness of the two major mechanisms of resolution of balance of payments crisis. It argues that IMF lending has met its counter-cyclical objectives through history and has been improving in terms of providing adequate lending facilities as well as focusing conditionality on macro-relevant areas. In contrast, and despite the spread of collective action clauses, much remains to be done in the area of debt restructuring. In this regard, it proposes a

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... ateral mechanism that offers a sequence of voluntary negotiations, mediation and eventual arbitration with pre-established deadlines, similar to that used in the World Trade Organization's dispute settlement process.