Report of the Managing Director to the International Monetary and Financial Committee: The Fund's Crisis Prevention Initiatives
November 14, 2001

The IMF in the Process of Change
Statement by Horst Köhler Managing Director of the IMF
On the Occasion of the Spring Meeting of the International Monetary and Financial Committee
April 29, 2001


Issues in Reserves Adequacy and Management
Prepared by the Monetary and Exchange Affairs Department and Policy Development and Review Department

(In consultation with other Departments)

October 15, 2001

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Contents

  1. Introduction

  2. Reserve Adequacy Assessment with a Focus on the Capital Account

  3. Implications for Reserve Management

    1. Implications for Reserve Management Policies
    2. Considerations Affecting Reserve Management Strategies
    3. Implications for Risk Management

  4. Conclusion
Appendix I.   Reserves Management Policies, Objectives, and Strategies in Selected Countries
Appendix II.  Outreach on Reserve Adequacy

Tables
1a. Securities Comparison: Execution Risk, and Liquidity Raising Properties
1b. Securities Comparison: Normal Versus Crisis Periods

Figures
1.  Reserves over Imports vs. Reserves over Short-Term Debt--Long-Run Trends

Boxes
1.  Disclosure of Data on International Reserves and Foreign Currency Liquidity
2.  Capital Account Considerations in Determining Reserve Adequacy
3.  Policies and Institutional Arrangements that Support Reserve Management
4.  Assessment of Market Liquidity and Return Risks
5.  Currency Composition of Reserves
6.  Implications of Higher Reserve Levels for the Investment Strategy
7.  Reserve Adequacy and Implications for Reserve Management for Countries with Limited or No Access to Capital Markets