Press Release No. 12/494

Press Release: IMF Management and Staff Welcome Opportunity to Discuss Independent Evaluation Office Report on International Reserves

December 19, 2012

The International Monetary Fund’s (IMF) management and staff thanked the Independent Evaluation Office (IEO) for the report evaluating the Fund’s work on reserve accumulation and related issues. “As recognized by the IEO, research by the Fund on reserve accumulation has been at the forefront of the academic debate, and good progress has been made by staff in developing a theoretical framework and concrete methodologies to ascertain reserve adequacy,” Managing Director Christine Lagarde said in a statement.

In her statement, Ms. Lagarde agreed with most of the Report’s recommendations noting they are “remarkably congruent with a number of recent Fund policy positions and new surveillance initiatives.” 

“Our work on international reserves was cast in the broader work stream on the international monetary system (IMS), and the approach to reserve issues was broad and multipronged with emphasis on the development of a strong global safety net, the articulation of adequate policies to manage volatile capital flows, and the integration of the discussion of reserves with other external sector policies,” Ms. Lagarde said.

Turning to the IMF’s rationale behind the work on reserve levels, Ms. Lagarde stated “the motivation was to make progress in assessing the right level of reserves for precautionary purposes given the need to balance their insurance benefits (demonstrated during the crisis) with the fact that holding excessive reserves can be costly both to the domestic and global economy.”

See also the Staff Response to the IEO Report and the Board discussion.