Central Bank Reserve Management and International Financial Stability

Central Bank Reserve Management and International Financial Stability—Some Post-Crisis Reflections

February 16, 2018

Preview Citation

Format: Chicago

Bradley Jones. Central Bank Reserve Management and International Financial Stability—Some Post-Crisis Reflections, (USA: International Monetary Fund, 2018) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Motivated by the tension first revealed during the global financial crisis between the domestic and international financial stability obligations of central bank reserve managers, this paper offers some reflections along four main lines. First, the paper highlights how official reserve management has evolved to mirror important aspects of private institutional investor behavior over time, and addresses the policy relevance of this convergence. Second, evidence is documented of procyclical portfolio behavior by reserve managers during the crisis, which added to the stabilization burden shouldered by central banks in reserve currency-issuing countries. Third, in appraising the evolution of related vulnerabilities since the crisis, the paper finds grounds for both cautious optimism and lingering concern, the balance of which points to an uncertain future resolution. Fourth, some potential remedies are presented to help dampen the procyclical impulses of reserve managers in future periods of international financial turbulence.

Subject: Banking, Central banks, Financial crises, Financial institutions, Global financial crisis of 2008-2009, International reserves, Reserve assets, Reserves management, Securities

Keywords: A number of central banks, Asset, Asset owner, Central bank, Central bank exposure, Central bank reserve management, Financial stability, Global, Global financial crisis of 2008-2009, International reserves, Liquidity needs, Market surveillance activity, Reserve assets, Reserve currency, Reserve manager, Reserves management, Risk assets, Risk management., Securities, Swap line, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/031
Stock No:

WPIEA2018031
ISBN:

9781484342008
ISSN:

1018-5941

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