Ch18International_Banking_Reserves__Debt_and_Risk(国际经济学-西北大学(美国)).pdfVIP

International Economics By Robert J. Carbaugh 9th Edition Chapter 18: International Banking: Reserves, Debt and Risk Copyright ©2004, South-Western College Publishing International reserves Nature of international reserves Reserves of foreign currency and other suitable assets are used to finance payments imbalances Reserves allow a nation to take more time to correct BOP disequilibrium (but may also delay needed action) Demand for reserves depends on the monetary value of international transactions and the size of payments imbalances Carbaugh, Chap. 18 2 International reserves Demand for international reserves Main factor in demand for reserves is the nature of the adjustment mechanisms to correct BOP imbalances Exchange rate flexibility is a crucial element of the adjustment process  Key use for reserves is to intervene in currency markets to defend an exchange rate The more a nation is willing to let its currency float, the less it will need sizable reserves Carbaugh, Chap. 18 3 International reserves Demand for international reserves Other factors affecting demand for reserves: Automatic adjustment mechanisms that respond to payments imbalances  Economic policies used to correct payments imbalances  International coordination of economic policies  Level of world prices and income Carbaugh, Chap. 18 4 International reserves Demand for reserves and exchange rate flexibility Carbaugh, Chap. 18 5 International reserves Supply of international reserves  International reserves may be owned by