International reserves before and after the Global Crisis: Is there no end to hoarding?

Joshua Aizenman, Yin-Wong Cheung , Hiro Ito 13 September 2014

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After the financial crises of the late 1990s many emerging economies recognised the benefits of self-insurance against the volatility associated with financial globalisation, increasing their ratio of international reserves to GDP substantially.1 The evidence in Bussière at al. (2014) supports this view, finding that countries with more reserves relative to short-term debt fared better during the Global Financial Crisis.

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Topics:  Global crisis International finance

Tags:  global financial crisis, international reserves, reserve hoarding

For a few dollars more: Reserves and growth in times of crises

Matthieu Bussière, Gong Cheng, Menzie D. Chinn , Noëmie Lisack 16 March 2014

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In the decade preceding the 2008 global financial crisis (GFC), emerging market economies accumulated large stocks of international reserves (see Figure 1). The unprecedented pace of reserve accumulation was at least partly a response to the lessons drawn from previous financial crises, which predominantly affected emerging markets. Most research on emerging-market crises suggests that countries with an insufficient level of reserves, measured against appropriately chosen benchmarks, suffered more from crises in the 1990s.1

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Topics:  International finance

Tags:  financial crises, international reserves, capital controls

Reserve accumulation and easy money helped to cause the subprime crisis: A conjecture in search of a theory

Guillermo Calvo 27 October 2009

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A view that is gaining popularity as one of the fundamental explanations for the current crisis is that emerging markets’ voracious appetite for international reserves coupled with record-low US policy interest rates and lax financial regulation to produce a frantic “search for yield,” the creation of fragile financial instruments, and occasionally outright fraud. For example see Henry Paulson’s discussion quoted in Guta (2009).

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Topics:  Global crisis International finance

Tags:  international reserves, financial regulation, global crisis

International reserve losses in the 2008-9 crisis: From “fear of floating” to the “fear of losing international reserves”?

Joshua Aizenman, Yi Sun 15 October 2009

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Investigating the patterns of exchange rates, interest rates, and international reserves during 1970-1999, Calvo and Reinhart (2002) inferred the prevalence of the “fear of floating”. Countries that say they allow their exchange rate to float mostly do not. Instead, frequently the authorities are attempting to stabilise the exchange rate through direct intervention in the foreign exchange market and in open market operations.

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Topics:  International finance

Tags:  reserves, international reserves, fear of floating, global crisis

Globalisation: Lessons from the past

Alan Taylor interviewed by Romesh Vaitilingam,

Date Published

Fri, 07/11/2008

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Topics

Economic history Global economy International finance
Tags
globalisation, trade liberalisation, financial market integration, international reserves
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