International Reserve Trends in the South Caucasus and Central Asia Region

Holger Floerkemeier and Mariusz Sumlinski

No 2008/041, IMF Working Papers from International Monetary Fund

Abstract: In recent years, the South Caucasus and Central Asia countries (CCA-6) have received significant foreign exchange inflows. While a healthy reserve buffer is desirable to selfinsure against external crises, holding international reserves also involves costs. We analyze the adequacy of CCA-6 reserves using widely recognized rules of thumb, and simulate optimal reserve levels applying the Jeanne (2007) model. Both the adequacy measures and the model-based simulations indicate that, with the exception of Tajikistan, CCA-6 reserves had increased to broadly comfortable levels by 2006. More recently, reserve adequacy has been tested in Kazakhstan, which has been affected by the 2007 global liquidity crunch.

Keywords: WP; reserve; CCA-6; reserve holding (search for similar items in EconPapers)
Pages: 27
Date: 2008-02-01
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Citations: View citations in EconPapers (2)

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