"IMF officials said it would benefit a “discrete and not particularly large group” of nations. "

Here's good news from the FT:

"The International Monetary Fund was on Wednesday set to approve a new emergency lending programme which it hopes will encourage rich governments to join in large-scale rescues to troubled countries.

The new liquidity facility is the culmination of a decade of attempts at the IMF, after the Asian financial crisis of 1997-98, to come up with a way of getting money quickly to relatively well-run emerging market countries hit by financial contagion."

It's about time. Why? More on that later.

"The new facility is similar in intent to the so-called “contingent credit line” (CCL), a pre-approved insurance-style policy developed by the IMF and the US Treasury in the aftermath of the Asian financial crisis.

But despite strong encouragement, no country ever applied for the CCL, fearing it would signal to investors that the government was worried about financial contagion. The new programme aims to avoid the stigma problem by having countries apply confidentially as they need it rather than in advance."

The stigma problem again. Good luck on the confidentiality.

"But fund officials said they hoped the programme would catalyse lending from rich governments and central banks. “It provides an assessment that the country involved has a stable debt position and good policies, and hopefully will provide a vehicle for others to supplement it if necessary,” the IMF official said.

A rescue package for Hungary, announced late on Tuesday, involved $8bn of European Union lending as well as $15.7bn from the IMF, although that was under the fund’s traditional “stand-by” arrangements rather than the new facility.'

Okay. So we have two distinct lending programs to monitor, and the real purpose of the new program is to buttress loans from the larger countries.

Now why do this? Well, for me, it's something like a chain only being as strong as its weakest link. Also, I think that Doha and other free trade agreements, which I ultimately want to see adopted, need such agencies and programs to facilitate that transition politically.

Brad Setser:

"The Fund cannot be a true global lender of last resort so long as it only has $200 billion to lend. Arend Kapteyn of Deutsche Bank noted recently that emerging markets have about $1.3 trillion in short-term external debt (with over $800b owned by emerging market banks) — a sum that far exceeds the Fund’s resources. But even if its lending is constrained, the Fund can provide financing in way that resemble the financing made available by a traditional lender of last resort.

That is the right move. I agree with Dani Rodrik. The scale of the current crisis demands innovation."