International Reserve Adequacy in Central America
IMF Working Papers, June 1, 2011
Source details
- Canonical URL
- International Reserve Adequacy in Central America
Other formats
Bibliographic details
- Authors: Kristin Magnusson Bernard
- Published: June 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455268443.001
Overview and objective
- Countries’ absolute and relative international reserves adequacy has recently attracted considerable attention.
- The analysis has however concentrated on the largest and most advanced economies.
- Objective: apply various methodologies for assessing reserve adequacy in Central America, taking into account the region’s high degree of deposit dollarization.
Key findings
- Reserve cover is low both in an absolute and relative sense.
- Low reserve cover suggests further reserve accumulation is an important policy option for reducing vulnerabilities.
Methodology
- Various methodologies for assessing reserve adequacy are applied to Central America.
- Analysis explicitly takes into account the region’s high degree of deposit dollarization.
Policy implications and recommendations
- Further reserve accumulation is identified as an important policy option to reduce vulnerabilities arising from low reserve cover.
Topics and keywords
- Subjects: Central banks; Emerging and frontier financial markets; Exchange rate flexibility; External debt; Financial markets; International reserves; Reserve positions; Reserves accumulation.
- Keywords: balance of payments crises, Central America, Central America's reserve cover, Central American economy, debt, demand regression, Emerging and frontier financial markets, financial dollarization, Foreign reserves, GDP ratio, GDP volatility, International reserves, precautionary reserve, reserve, reserve demand, Reserve positions, Reserves accumulation, WP.