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Central Banks as Dollar Lenders of Last Resort : Implications for Regulation and Reserve Holdings

Das, Mitali; Gopinath, Gita; Kim, Taehoon; Stein, Jeremy C. - National Bureau of Economic Research - 2022

This paper explores how non-U.S. central banks behave when firms in their economies engage in currency mismatch, borrowing more heavily in dollars than justified by their operating exposures. We begin by documenting that, in a panel of 53 countries, central bank holdings of dollar reserves are...

Persistent link: https://www.econbiz.de/10013477280

The Desirability of a Dollar Appreciation, Given a Contractionary U.S. Monetary Policy

Frankel, Jeffrey A. - 1983

Undesirable real effects have been attributed to floating exchange rates in general, and the 1980-83 appreciation of the dollar in particular.In the appreciating country, the U.S., export industries lose competitiveness and so output falls. In the other country, say Europe, the exchange rate...

Persistent link: https://www.econbiz.de/10012477992

Monetary Policy Challenges in Emerging Markets : Sudden Stop, Liability Dollarization, and Lender of Last Resort

Calvo, Guillermo A. - 2006

The paper argues that Emerging Market economies (EMs) face financial vulnerabilities that weaken the effectiveness of a domestic Lender of Last Resort (LOLR). As a result, monetary policy is inextricably linked to the state of the credit market. In particular, the central bank should be ready to...

Persistent link: https://www.econbiz.de/10012465871

Sterling's Past, Dollar's Future : Historical Perspectives on Reserve Currency Competition

Eichengreen, Barry - 2005

This paper provides an historical perspective on reserve currency competition and on the prospects of the dollar as an international currency. It questions the conventional wisdom that competition for reserve-currency status is a winner-take-all game, showing that several currencies have often...

Persistent link: https://www.econbiz.de/10012467347

Financial Instability, Reserves, and Central Bank Swap Lines in the Panic of 2008

Obstfeld, Maurice - 2009

In this paper we connect the events of the last twelve months, "The Panic of 2008" as it has been called, to the demand for international reserves. In previous work, we have shown that international reserve demand can be rationalized by a central bank's desire to backstop the broad money supply...

Persistent link: https://www.econbiz.de/10012463821

Currency Substitution and the Fluctuations of Foreign-Exchange Reserves with Credibly Fixed Exchange Rates

Giovannini, Alberto - 1991

This paper studies the fluctuations of foreign exchange reserves under a regime of credibly fixed exchange rates. The paper considers a variety of assumptions on the determinants of money demand and currency substitution

Persistent link: https://www.econbiz.de/10012475379

U.S. Intervention During the Bretton Woods Era : 1962-1973

Bordo, Michael D. - 2011

By the early 1960s, outstanding U.S. dollar liabilities began to exceed the U.S. gold stock, suggesting that the United States could not completely maintain its pledge to convert dollars into gold at the official price. This raised uncertainty about the Bretton Woods parity grid, and speculation...

Persistent link: https://www.econbiz.de/10012461711

Optimal Foreign Reserves and Central Bank Policy Under Financial Stress

Céspedes, Luis Felipe - 2020

We study the interaction between optimal foreign reserves accumulation and central bank international liquidity provision in a small open economy under financial stress. Firms and households finance investment and consumption by borrowing from domestic financial intermediaries (banks), which in...

Persistent link: https://www.econbiz.de/10012482143

Chronicle of a Dollarization Foretold : Inflation and Exchange Rates Dynamics

Caravello, Tomás E.; Martinez-Bruera, Pedro; Werning, Iván - National Bureau of Economic Research - 2023

We study the effects of an anticipated dollarization, announced today but planned to be implemented at some future date …, in a simple open-economy model. Motivated by the profile of countries considering dollarization we make the following …, without dollarization monetary policy finances a deficit via seignorage. We focus on the pre-dollarization period. Our results …

Persistent link: https://www.econbiz.de/10014421188

Monetary Policy and the Currency Denomination of Debt : A Tale of Two Equilibria

Velasco, Andres - 2004

Exchange rate policies depend on portfolio choices, and portfolio choices depend on anticipated exchange rate policies. This opens the door to multiple equilibria in policy regimes. We construct a model in which agents optimally choose to denominate their assets and liabilities either in...

Persistent link: https://www.econbiz.de/10012467862