Assessing Reserve Adequacy - Specific Proposals

Policy Papers, December 19, 2014

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Assessing Reserve Adequacy - Specific Proposals

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Bibliographic details

• Published: December 19, 2014
• Series: Policy Papers

Overview

• Reserves provide insurance against shocks and, with sound policies, can help reduce the likelihood of balance of payment crises and preserve economic and financial stability.
• Reserves can arise from both precautionary and non-precautionary policy objectives and institutional settings.
• Reserve holdings can bring important benefits but can sometimes be costly.
• This paper brings together recent Fund work on reserve adequacy issues with the aim of strengthening their discussion in bilateral surveillance.

Motivation and context

• Addresses lack of consensus on how to assess reserve holdings across different economies despite the importance of such assessments for external stability.
• Forms part of the Fund’s response to the 2012 IEO evaluation of the Fund’s advice related to international reserves, which recommended that assessments of international reserves in bilateral surveillance reports should be more detailed and reflect country circumstances.
• Part of a work stream outlining a framework for discussing reserve adequacy in different economies.

Main proposals and framework

• Proposes outlining a framework to discuss reserve adequacy tailored to different country circumstances.
• Emphasizes evenhandedness so that countries with similar circumstances are assessed in similar ways, while allowing depth and emphasis to vary depending on country conditions and needs.

Recommendations for Article IV reports

• Where warranted, individual country Article IV reports should include:
  • A fuller discussion of the authorities’ stated objectives for holding reserves, distinguishing precautionary and non-precautionary objectives.
  • An assessment of reserve needs for precautionary purposes.
  • A discussion of the cost of reserves.

Publication and access

• Publication type: Policy Papers
• Publication date: December 19, 2014
• Format: PDF available for download
• Citation example present on page: "Assessing Reserve Adequacy - Specific Proposals, (USA: International Monetary Fund, 0) accessed 9/18/2026"

Subjects and keywords

• Bilateral surveillance
• Capital controls
• Capital outflows
• Dollarization
• Reserve assets
• Reserves
• Reserves adequacy

Source: Assessing Reserve Adequacy - Specific Proposals (December 19, 2014), International Monetary Fund.

Content in this bundle

• Assessing Reserve Adequacy--Specific Proposals, IMF Policy Paper, December 19, 2014
  • Assessing Reserve Adequacy--Specific Proposals, IMF Policy Paper, December 19, 2014 (Markdown version)
  • Assessing Reserve Adequacy--Specific Proposals, IMF Policy Paper, December 19, 2014 (PDF)