This paper analyzes the unanalized topic in macroeconomic (monetary) politics, which is the emergence of the currency crisis as a consequence of targeting inflation. Many central banks adopted inflation targeting under a pressure from the IMF. Sudden depreciation of exchange rate which results...

In July 1991, India began to dismantle its long-standing, highly restrictive import control regime and move toward a more open economy. How were policymakers able to dislodge and replace an entrenched system with powerful vested interests behind it? Standard explanations for policy change -...

The share of U.S. dollar assets in the official foreign exchange reserve portfolios of central banks is sometimes taken as an indicator of dollar status. We show that the observed decline in the aggregate share of U.S. dollar assets does not stem from a systematic shift in currency preferences...

This paper analyses the effects of the foreign exchange re-serves accumulation on the key nominal and real macroeconomicvariables (GDP, employment, prices and exchange rates) in BRICcountries (Brazil, Russia, India, China). VAR model was used toempirically examine the effect of accumulation of...

We propose a macroprudential theory of foreign reserve accumulation that can rationalize the secular trends in public and private international capital flows. In middle-income countries, the increase in international reserves has been associated with elevated private capital inflows, both in the...

Utilizing logit econometric models, this paper investigates the primary factors contributing to the onset of banking, inflation, and foreign exchange reserves crises in Bolivia. The analysis reveals that banking crises are more likely when the terms of trade improve, with greater monetary...

This study reviews new perceptions of an imminent decline of the international role of the US dollar and implications for the euro. It considers developments in international reserves, invoicing, debt and payment systems. Strengths and weaknesses of the US and euro area economies are discussed...

I examine how governments have managed their holdings of gold and dollar reserves in recent decades, a period when gold's share of aggregate international reserves rose and the dollar's share fell. Using data on central banks’ reserve currency composition and official sector purchases of U.S....

This is the third report on the climate-related financial disclosures of Eurosystem assets held for monetary policy purposes and of the ECB's foreign reserves. 2 The primary objective of the ESCB is to maintain price stability in the euro area, targeting an inflation rate of 2% over the medium...

This paper examines the role of foreign exchange reserve demand in mitigating inflationary pressures resulting from money supply growth in reserve currency issuing states (RCISs). Despite recurrent substantial monetary expansions in RCISs in response to recessions such as the 2000 Post-Dot Com...

Recently, there has been increasing research interest in the historical composition of central bank reserves. However, studies in this area is hindered by a lack of data, as such data spanning multiple centuries is only available for a small number of countries. This paper presents an empirical...

Purpose - This paper aims to obtain a recent estimate of the cost of precautionary foreign reserve accumulation that emerging market and developing economies (EMDEs) had to endure to protect themselves against the risks of financial globalization. In addition, the study estimates the cost of...

This paper investigates the cyclicality of international reserves and their role in macroeconomic stabilization. We challenge two widely held assumptions: (1) central banks typically manage IR counter-cyclically—accumulating reserves during booms and drawing them down during downturns; and (2)...

This study evaluates the effectiveness of the Chiang Mai Initiative Multilateralization (CMIM) in safeguarding financial stability among members of the Association of Southeast Asian Nations (ASEAN) plus Japan, the People's Republic of China, and the Republic of Korea-particularly in response to...

We investigate the optimal time-consistent use of foreign exchange interventions (FXI) in a small open economy model driven by endowment and portfolio flow shocks, with endogenous FX market depth and a lower bound constraint on FX reserves. In a competitive equilibrium, large capital flows...

How should central banks explore tokenized reserves? Central banks are increasingly exploring how to make their reserves available to selected banks using distributed ledger technology, referred to as tokenized reserves. This chapter covers policy objectives for tokenized reserves, operating...

This year’s report provides the external sector assessment of 30 of the world’s largest economies on the basis of their 2024 data. Global current account balances in 2024 widened significantly. Staff assessment suggests that excess current account balances account for about two-thirds of the...

This paper examines Ramsey-optimal policies related to fiscal spending and international reserve accumulation in response to volatile aid flows in Low-Income Countries (LICs). We develop a real Dynamic Stochastic General Equilibrium (DSGE) model of a small open economy, incorporating government...

This research essay explores how US dollar centrality and strength may impede decarbonization. First, I suggest that because US dollar centrality enables higher US household consumption and imports, and US household consumption is comparatively carbon-intensive, centrality can increase per...

Countries in Southeast Asia, including Indonesia, Malaysia, and Thailand, are facing an increasing risk of large external shocks such as disasters, and managing such shocks must be a critical priority for policymakers in the region. This paper explores optimal policy responses to large external...

The political climate of any country has become one of the pillars of decision-making for investment and any other financial business. Zimbabwe is one of the countries that have experienced political instability for the longest time. Many studies have looked at the impact of political risk on...

The share of U.S. dollar assets in the official foreign exchange reserve portfolios of central banks is sometimes taken as an indicator of dollar status. We show that the observed decline in the aggregate share of U.S. dollar assets does not stem from a systematic shift in currency preferences...

International foreign exchange reserves are widely acknowledged as a global medium of exchange that possesses a readily available characteristic. Official public assets, which are foreign assets kept and organized by the monetary authorities of countries, serve as a complement to foreign...