International Reserve Adequacy in Central America

June 1, 2011

Preview Citation

Format: Chicago

Kristin Magnussen. International Reserve Adequacy in Central America, (USA: International Monetary Fund, 2011) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Countries’ absolute and relative international reserves adequacy has recently attracted considerable attention. The analysis has however concentrated on the largest and most advanced economies. We apply various methodologies for assessing reserve adequacy in Central America, taking into account the region’s high degree of deposit dollarization. We find that reserve cover is low both in an absolute and relative sense, suggesting further reserve accumulation is an important policy option for reducing vulnerabilities.

Subject: Costa Rica, Dominican Republic, Foreign exchange, Guatemala, Honduras, Nicaragua

Keywords: Balance of payments crises, Central America, Central American economy, Central America's reserve cover, 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

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/144
Stock No:

WPIEA2011144
ISBN:

9781455268443
ISSN:

1018-5941

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