Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?

Barry Eichengreen ()

No 12451, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The accumulation of international reserves by emerging markets raises the question of how to best utilize these funds. This paper explores two routes through which the pooling of reserves could enhance stability and welfare. First, the reserve pool could be used for emergency lending in response to sudden stops. Second, a portion of the reserve pool along with borrowed funds could be used to purchase contingent debt securities issued by governments and corporations, helping to solve the first-mover problem that limits the liquidity of markets in these instruments and hinders their acceptance by private investors. This paper argues that the second option is more likely to be feasible and productive.

JEL-codes: F0 F02 F39 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-fmk
Date: 2006-08
Note: IFM
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Journal Article: Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America? (2007)
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