Optimal Reserves in the Eastern Caribbean Currency Union

Wendell A. Samuel, Mario Dehesa and Emilio Pineda

No 09/77, IMF Working Papers from International Monetary Fund

Abstract: Recent turbulence in global and Caribbean regional financial markets underscore the importance of reassessing the adequacy of international reserves held by the Eastern Caribbean Central Bank (ECCB). Using the Jeanne (2007) optimization framework, this paper finds that international reserves held by the ECCB are generally adequate for a variety of external current account and capital account shocks. However, the ECCB would be challenged in the event of moderate to severe deposit outflows.

Keywords: Reserves; Eastern Caribbean Currency Union; Emerging markets; Monetary unions; Capital flows; Economic models (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mon and nep-opm
Date: 2009-04-22
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