Is the US too big to fail?

Carmen Reinhart and Vincent Reinhart

MPRA Paper from University Library of Munich, Germany

Abstract: Why are investors rushing to purchase US government securities when the US is the epicentre of the financial crisis? This column attributes the paradox to key emerging market economies’ exchange practices, which require reserves most often invested in US government securities. America’s exorbitant privilege comes with a cost and a responsibility that US policy makers should bear in mind as they handle the crisis.

Keywords: financial crisis; exchange rates; reserves; government (search for similar items in EconPapers)
JEL-codes: E6 F2 F3 (search for similar items in EconPapers)
Date: 2008-11-17
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published in VoxEU-CEPR (2008): pp. 1-9

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12976

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