The International Monetary Fund will this week pitch a plan for a global framework of regional financial safety nets so that future crises can be better-managed. Much like its cooperation with the European bailout fund, the IMF is also working to establish a structured arrangement with existing regional financial liquidity facilities around the globe. As part of the IMF's annual summit, officials are hosting a meeting of regional facilities to discuss ways to cooperate and improve crisis prevention. The IMF wants a more concrete safety net infrastructure instead of the existing raft of scattered initiatives in order to help avoid scrambling to craft emergency responses. The Fund acts like the fire station for the global economy, providing rescue loans when countries are ablaze in crisis. But over the years, countries in Asia and Latin America have tried to shun the IMF because of the tough conditions attached to the loans, instead trying to put together regional bailout funds. During the Asian financial crisis of a decade ago, the IMF and the U.S. Treasury killed a similar idea put forward by Asian countries, called the Asian Monetary Fund, because they feared it would compete with the IMF. Since then, though, regional funds have proliferated and the IMF has tried to convince them to collaborate. So far, the discussions haven't gotten very far. The Fund has already begun to develop links to the Chiang Mai initiative, which is a $120 billion Asian currency swap agreement, but wants to expand its network to include other regions, such as the Middle East and Latin America. The IMF is hoping to apply the lessons of the European debt crisis to their network of regional safety nets. Economists say that the delayed response in constructing the European stabilization fund--basically a bailout mechanism with nearly a $1 trillion in available resources, including IMF contributions--exacerbated the damage and spill-over effects across the continent. To avoid the stigma of approaching the IMF for extraordinary assistance--which can trigger another round of negative chain reactions in markets--more than a dozen Asian countries including China, South Korea, Japan and Singapore agreed to a currency swap mechanism earlier this year under the Chiang Mai initiative. Linking the Chiang Mai initiative to the IMF not only increases the oversight of liquidity actions, it also dramatically boosts the funding available in hard times. By collaborating, the IMF can use it's hefty arsenal of resources while leveraging the local knowledge of regional facilities. A global framework of liquidity facilities would develop a system of cooperation where the rules are known in advance, giving more certainty both to governments and markets. Reza Moghadam, head of the IMF's policy and strategy team, says a global safety net is needed to enable countries with good policies to insure against bad outcomes, 'especially when they are innocent bystanders caught up in a financial turmoil,' he wrote in a recent IMF blog. Many Asian countries, despite having sound fiscal strategies, were hit hard by the global crisis in the midst of the credit crunch as international lending to Asia withered. In response to the global crisis, the IMF cobbled together a number of ad hoc measures, including boosting available resources to $800 billion and creating new lines of credit. The flexible credit line, for example, was developed for crisis-mitigation in countries that have strong track records of economic performance but experience temporary difficulties. South Korea, which currently chairs the G-20, has been pushing to improve global financial safety nets as a high priority for the G-20 agenda, an effort drawing support from France and the U.K. The French, among others, view financial safety nets as a way to prevent countries pooling massive currency reserves, avoiding turbulence in exchange rate markets. Some German officials have objected to the potential for safety nets without responsible conditions, concerned about fueling moral hazard.