and's parameters. This highly specialized form of managed currency has found particular favor among developing nations as a way to balance the advantages of fixed currencies with the advantages of floating currencies.
The IMF is the international lender of last resort. The fund was set up in the twentieth century in order to respond to situations where the current account deficit and the capital account surplus are significantly different. Typically, these two items are in balance, or are close to balancing, meaning that the money coming into the nation to buy domestic assets is roughly the same as the money leaving the nation to buy foreign goods and services (and vice versa) (Baumol & Blinder, 2001, p. 379).
When a current account deficit becomes too large, there exists the possibility that the nation will not be able to pay its foreign debt. This causes a problem not only for the debtor nation, but also for the countries owed the money since it reduces the funds flowing into their economies
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