And here is the money. Ms. Lagarde announced that over the next four years $40 billion – half of that from the IMF – would be provided to support the Ukrainian economy.
Ukraine's lender of last resort
If there is peace, you can think of these $40 billion as seed money. With its vast and fertile land, its skilled labor force and a diversified (if rusty) industrial base this beautiful country could easily attract large private direct investment inflows.
The IMF is clearly playing a key role here, because it is hard to see how large-scale fund disbursements to support Ukraine's meaningful and sustainable economic reforms can be carried out unless the guns fall silent. With no other source of finance readily available, the IMF's political clout could be decisive in the successful implementation of the latest round of cease-fire and peace agreements negotiated in Minsk, Belarus, on February 12, 2015.
Read MoreUkraine's economic 'meltdown' just got worse
Europe would then be extricated from the claws of its old demons of division, exclusion and medieval savagery.
That is what some European leaders are counting on. Their foreign policy chief Federica Mogherini told a meeting of the group's top diplomats last Friday (March 6) that "… around our continent … cooperation is far better than confrontation." She was echoing increasingly pressing calls to stop Ukraine's fighting and restore Europe's unimpeded flows of commerce and finance.
All this puts the IMF in an interesting position. By forcing the warring parties in Ukraine to seek peace as a condition of economic survival, the IMF can also help the recovery of the European economy by removing obstacles to intra-regional trade that are costing hundreds of thousands of jobs.
Arguably, that would be of far greater help than the European Central Bank's (ECB) debasement of the euro with an avalanche of new liquidity that no area economy needs with an already record-low interest rate of 0.05 percent. Even Germany opposed that ill-conceived policy. Never an advocate of a weak currency, Germany does not need a sinking euro to maintain a trade surplus exceeding 7 percent of its economy.
For my part, I believe that there is no need for sweeping and desperate measures the ECB will begin implementing today. The euro area's demand for money is accelerating; its broad monetary aggregate M3 rose 4.1 percent in the year to January, a strong pickup from an annual growth rate of 3.1 percent during the fourth quarter of last year. The decline of loans to the private sector has almost ground to a halt, mortgage lending is improving, and so are bank loans to households and non-financial corporations.
Looking at these numbers, a die-hard Dutch monetarist might say: Stop messing around, the monetary policy is working, it needs time to repair the damage to the banking system and the economy done by your past policy mistakes.
I would repeat: Amen.