International reserves as a mirror of external effects and macroeconomic policies

Soňa Benecká and Lubos Komarek

A chapter in CNB Global Economic Outlook - April 2019, 2019, pp 15-22 from Czech National Bank, Research and Statistics Department

Abstract: The article sets out to document the motives that have led central banks (especially inflation targeters) to accumulate international reserves over the last two decades. We start by outlining contemporary theories on the adequate level of international reserves, a topic the economic literature has been addressing since around the second half of the 1960s. We then present evidence of a sharp absolute increase in international reserves around the world and rank the central banks with the highest reserve levels. This ranking changes significantly depending on the ratio selected (reserves are most often expressed as a ratio to GDP, exports, M2 or short-term external debt). We also test the hypothesis that there is a concave relationship between the reserves-to-GDP ratio and economic development as measured by GDP per capita. The article goes on to discuss the various motives that have led to the accumulation of international reserves, most notably external effects (especially in emerging economies) and macroeconomic policies (particularly unconventional ones) in developed countries. We also pay greater attention to the current debate about the level of international reserves and the sensitivity of an economy to changes in the Federal Reserve’s monetary policy. In several places in the text, we look more closely at the specific case of the Czech Republic, where unconventional monetary policy led to strong growth in international reserves.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cnb.cz/export/sites/cnb/en/monetary-po ... 9/gev_2019_04_en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cnb:ocpubc:geo2019/4

Access Statistics for this chapter

More chapters in Occasional Publications - Chapters in Edited Volumes from Czech National Bank, Research and Statistics Department Contact information at EDIRC.
Bibliographic data for series maintained by Tomas Karhanek ().