During the last two decades the emerging countries have experienced an upward trend in reserve accumulation. However, high level of foreign reserve assets implies certain costs. Consequently, given the trade-off between the benefits and the costs of holding reserves, there are issues related to...

During the last two decades the emerging countries have experienced an upward trend in reserve accumulation. However, high level of foreign reserve assets implies certain costs. Consequently, given the trade-off between the benefits and the costs of holding reserves, there are issues related to...

Two features of East Asia’s recovery from the financial turmoil of 1997- 98 appear to be rather paradoxical. First, the regional economies (except Hong Kong, China and Malaysia) have allowed a relatively greater albeit modest degree of variability of their currencies according to market...

Banks fail because of bad economic fundamentals, or panic withdrawals by depositors. We show that even though there is no need for regulation when the bank’s policy regarding its solvency is transparent, there is indeed need for regulation if there is a lack of transparency. When the bank...

Discussion around the optimality of foreign exchange reserves has intensified recently, due to a seeming ineficient increasing of foreign reserves, especially in the developing world. This paper presents the state of this issue, challenging the conventional perspective according to which foreign...