Optimal Reserves in the Eastern Caribbean Currency Union

ByWendell A. Samuel, Emilio Pineda, Mario Dehesa

April 1, 2009

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Capital account, Current account, External debt, International reserves, Monetary base

Keywords: opportunity cost, reserve, reserve cover rule, WP

Pages:
20
Volume:
2009
DOI:
https://doi.org/10.5089/9781451872248.001
Issue:
077
Series:
Working Paper No. 2009/077
Stock No:
WPIEA2009077
ISBN:
9781451872248
ISSN:
1018-5941

IMF’s Work

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

Loading component...

IMF Working Papers