Policy Papers

<p>This note provides operational guidance to staff on reserve adequacy discussions in the IMF’s bilateral and multilateral surveillance. It is based on the views presented in the policy paper <a href="/external/np/pp/eng/2014/121914.pdf">Assessing Reserve Adequacy—Specific Proposals</a> and the related Board discussion. The note addresses key issues related to Staff’s advice on the assessment of the adequacy of reserves and related items, including answering the following questions:</p> <ul> <li>What is the expected coverage of reserve issues at different stages of the bilateral surveillance process (Policy Note, mission, and Staff Report)?</li> <li>Which reserve adequacy tools best fit different economies based on their financial maturity, economic flexibility, and market access?</li> <li>What do possible reserve needs in mature markets relate to, and how can their adequacy be assessed?</li> <li>How can reserve adequacy discussions for emerging and deepening financial markets be tailored and applied to better evaluate reserve levels in: (i) commodity-intensive economies; (ii) countries with capital flow management measures (CFMs); and (iii) partially and fully dollarized economies?</li> <li>What reserve adequacy considerations hold for countries with limited access to capital markets? How can metrics for these economies be tailored to evaluate their reserve needs?</li> <li>How should potential drains on reserves be covered?</li> <li>What are the various measures of the cost of reserves for countries with and without market access?</li></ul>