Optimal Reserves in the Eastern Caribbean Currency Union
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Summary:
Recent turbulence in global and Caribbean regional financial markets underscore the importance of reassessing the adequacy of international reserves held by the Eastern Caribbean Central Bank (ECCB). Using the Jeanne (2007) optimization framework, this paper finds that international reserves held by the ECCB are generally adequate for a variety of external current account and capital account shocks. However, the ECCB would be challenged in the event of moderate to severe deposit outflows.
Series:
Working Paper No. 2009/077
Subject:
Capital account Current account External debt International reserves Monetary base
English
Publication Date:
April 1, 2009
ISBN/ISSN:
9781451872248/1018-5941
Stock No:
WPIEA2009077
Pages:
20
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