as economist Arvind Subramanian of the Peterson Institute makes clear in an open letter to IMF Managing Director Christine Lagarde. What the IMF should do is organize a huge rescue fund -- at least $1 trillion to $2 trillion, says Subramanian -- to backstop Europe in case more countries lose access to private credit markets.
Of course, the IMF does not exist separately from its members. Some countries will have to supply this $2 trillion. Will they be content to leave European sovereignty alone? I doubt it. Instead, I imagine something like the DC Financial Control Board being put into place, with the power to override national budget decisions.
In fact, it is not too much of a stretch to imagine a scenario in which Europe, Japan, and the United States all lose their sovereignty in the next few years. We could all be subject to financial control boards under the auspices of the IMF.