Optimal Reserves in the Eastern Caribbean Currency Union

By Wendell A. Samuel, Emilio Pineda, Mario Dehesa

April 1, 2009

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Wendell A. Samuel, Emilio Pineda, and Mario Dehesa. Optimal Reserves in the Eastern Caribbean Currency Union, (USA: International Monetary Fund, 2009) accessed November 21, 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

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.

Subject: Capital account, Current account, External debt, International reserves, Monetary base

Keywords: Opportunity cost, Reserve, Reserve cover rule, WP

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/077
Stock No:

WPIEA2009077
ISBN:

9781451872248
ISSN:

1018-5941

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