{
  "title": "Accumulating Foreign Reserves Under Floating Exchange Rates",
  "publication": "IMF Working Papers, April 1, 2008",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/accumulating-foreign-reserves-under-floating-exchange-rates-21849",
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  "summary": "Official accumulation of foreign reserves may be perceived as interventions to influence the exchange rate, undermining the credibility of floating exchange rates and inflation targets.",
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    {
      "heading": "Summary of purpose and approach",
      "content": "- Develops a theoretical framework to study the interaction between reserve accumulation and monetary policy under floating exchange rates.\n- Examines how official accumulation of foreign reserves may be perceived as interventions to influence the exchange rate, potentially undermining the credibility of floating exchange rates and inflation targets.\n- Analyzes institutional arrangements for delegation versus centralization of intervention and monetary policy decisions."
    },
    {
      "heading": "Key findings",
      "content": "- The model uncovers a trade-off between the speed of reserve accumulation and anti-inflationary credibility.\n- Under reasonable assumptions, delegation of intervention and monetary policy decisions to separate government agencies allows faster reserve accumulation.\n- Centralization of intervention and monetary policy decisions results in a more stable economy.\n- The analysis underscores the importance of institutional features of policymaking in open economies that are often overlooked."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Foreign exchange intervention, Inflation, Inflation targeting, Institutional arrangements for revenue administration, Reserves accumulation\n- Keywords: monetary policy, mover accent, WP\n\n---\n\n Content in this bundle\n\n- wp0896\n  - wp0896 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0896 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/accumulating-foreign-reserves-under-floating-exchange-rates-21849"
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    "[Markdown version](/en/publications/wp/issues/2016/12/31/accumulating-foreign-reserves-under-floating-exchange-rates-21849/index.md)",
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    "Authors: Fernando M. Gonçalves",
    "Published: April 1, 2008",
    "Series: IMF Working Papers",
    "Develops a theoretical framework to study the interaction between reserve accumulation and monetary policy under floating exchange rates.",
    "Examines how official accumulation of foreign reserves may be perceived as interventions to influence the exchange rate, potentially undermining the credibility of floating exchange rates and inflation targets.",
    "Analyzes institutional arrangements for delegation versus centralization of intervention and monetary policy decisions.",
    "The model uncovers a trade-off between the speed of reserve accumulation and anti-inflationary credibility.",
    "Under reasonable assumptions, delegation of intervention and monetary policy decisions to separate government agencies allows faster reserve accumulation.",
    "Centralization of intervention and monetary policy decisions results in a more stable economy.",
    "The analysis underscores the importance of institutional features of policymaking in open economies that are often overlooked.",
    "Subject: Foreign exchange intervention, Inflation, Inflation targeting, Institutional arrangements for revenue administration, Reserves accumulation",
    "Keywords: monetary policy, mover accent, WP",
    "**_wp0896**"
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