Crises often trigger new modes of governance between international organizations. The latest financial crisis has brought about an increasing degree of policy coordination between the “original” global lender of last resort, the International Monetary Fund (IMF), and the “emerging” regional lender of last resort, the European Union (EU). Perhaps most notable was the sudden turn toward joint management of the multiple crises that several European national financial systems encountered despite their reputation, in the eyes of both organizations, as “advanced” and thus stable economies. Joint crisis lending by the IMF and the EU, formally launched with the case of Hungary in late 2008, has intensified with loan programs for Latvia and Romania, and particularly for the European Monetary Union (EMU) members Greece, Ireland, and Portugal. The complex processes in which such emergency loan programs are approved, implemented, and monitored by both the IMF and the EU reveal initial obstacles to coordination, as well as means to overcome them by aligning policy preferences. This paper identifies these obstacles both in and between the two organizations as “pathologies” of coordination before shedding light on the function of joint missions as the decisive remedy for wanting alignment. It argues that while iterative interactions are conducive to better policy coordination, most of the remaining disagreements have been “solved” in line with prevailing domestic, as well as supranational, preferences in Europe.
