The next 2 weeks look like they will be critical in determining the global policy response to the financial crisis.  Events are moving faster than any long-scheduled summit (such as G20 in April, let alone G8 in Sardinia in July) can hope to maintain their relevance.  One interesting element of the response is that the multilateral financial institutions appear to be acting to the maximum of their existing mandates even as the politicians talk about revisiting their mandates and functions.  

Thus the IMF today has semi-officially dumped the program targets on its huge loan to Ukraine; the targets were looking unachievable anyway (e.g. balanced budget) but the lingering uncertainty about whether Ukraine could access the next tranche of its loan was only making things worse.  The Latvia program will soon have to be reconsidered too. 

Then there’s joint World Bank/European Investment Bank/European Bank for Reconstruction and Development $30 billion financing package for eastern Europe focused on the banking sectors.  Again one is left to read between the lines but the European Commission sounds somewhat annoyed at what it appears to view as a second-guessing of its own strategy (whatever that is) for dealing with the crisis.  The weekend emergency EU summit will have to deal with the issue.  We don’t know if Edward’s proposals are circulating among the pre-summit position papers. 

And finally over the next couple of weeks we might get some sense of whether the UK and US have finally managed to stabilise their large commercial banks.   RBS and Citigroup have essentially gotten the last possible government assistance short of full nationalisation, but if confidence continues to drain and/or other banks get pulled into the vortex, governments will be forced into the even less palatable options (not least: what should happen to troubled banks’ bondholders?).

And that’s before we get any unpleasant surprises in the form of new countries or banks showing up at the policy intensive care ward.  Adding to the sense of unsettled times: Six Nations Rugby on a Friday?