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Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?

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Author Info
Barry Eichengreen ()

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Abstract

The accumulation of international reserves by emerging markets raises the question of how to best utilize these funds. This paper explores two routes through which the pooling of reserves could enhance stability and welfare. First, the reserve pool could be used for emergency lending in response to sudden stops. Second, a portion of the reserve pool along with borrowed funds could be used to purchase contingent debt securities issued by governments and corporations, helping to solve the first-mover problem that limits the liquidity of markets in these instruments and hinders their acceptance by private investors. This paper argues that the second option is more likely to be feasible and productive. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11079-007-9001-4
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Publisher Info
Article provided by Springer in its journal Open Economies Review.

Volume (Year): 18 (2007)
Issue (Month): 1 (February)
Pages: 27-52
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:openec:v:18:y:2007:i:1:p:27-52

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Web page: http://www.springerlink.com/link.asp?id=100323

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords: International reserves; Reserve pooling; Insurance; Financial development; F0; F4;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Eduardo Levy-Yeyati, 2004. "FINANCIAL DOLLARIZATION: Evaluating the consequences," Econometric Society 2004 Latin American Meetings 184, Econometric Society. [Downloadable!]
    Other versions:
  3. Tito Cordella & Eduardo Levy Yeyati, 2005. "A (New) Country Insurance Facility," IMF Working Papers 05/23, International Monetary Fund. [Downloadable!]
    Other versions:
  4. Joshua Aizenman & Jaewoo Lee, 2005. "International Reserves: Precautionary versus Mercantilist Views, Theory and Evidence," NBER Working Papers 11366, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Glick, Reuven & Rose, Andrew K, 1998. "Contagion and Trade: Why are Currency Crises Regional," CEPR Discussion Papers 1947, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Stefano Athanasoulis & Robert Shiller & Eric van Wincoop, 1999. "Macro markets and financial security," Economic Policy Review, Federal Reserve Bank of New York, issue Apr, pages 21-39. [Downloadable!]
  7. Timothy D. Lane & Steven Phillips, 2000. "Does IMF Financing Result in Moral Hazard?," IMF Working Papers 00/168, International Monetary Fund.
  8. Reinhart, Carmen & Calvo, Guillermo, 1999. "Capital Flow Reversals,the Exchange Rate Debate,and Dollarization," MPRA Paper 8951, University Library of Munich, Germany. [Downloadable!]
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  10. Ricardo J. Caballero, 2002. "Coping with Chile’s External Vulnerability: A Financial Problem," Working Papers Central Bank of Chile 154, Central Bank of Chile. [Downloadable!]
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  11. Domac, Ilker & Martinez-Peria, Maria Soledad, 2000. "Banking crises and exchange rate regimes - Is there a link?," Policy Research Working Paper Series 2489, The World Bank. [Downloadable!]
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  12. Juan Carlos Berganza & Alicia García-Herrero, 2004. "What makes balance sheet effects detrimental for the country risk premium?," Banco de España Working Papers 0423, Banco de España. [Downloadable!]
  13. Caballero, Ricardo, 2003. "On the international financial architecture: Insuring emerging markets," Journal of Financial Transformation, Capco Institute, vol. 7, pages 8-12.
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  14. Guillermo A. Calvo & Alejandro Izquierdo & Luis-Fernando Mejia, 2004. "On the Empirics of Sudden Stops: The Relevance of Balance-Sheet Effects," NBER Working Papers 10520, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Ilhyock Shim & Ralph Chami & Sunil Sharma, 2004. "A Model of the IMF as a Coinsurance Arrangement," IMF Working Papers 04/219, International Monetary Fund.
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  16. Heller, H Robert, 1970. "Wealth and International Reserves," The Review of Economics and Statistics, MIT Press, vol. 52(2), pages 212-14, May. [Downloadable!] (restricted)
  17. Eduardo Borensztein & Paolo Mauro, 2004. "The case for GDP-indexed bonds," Economic Policy, CEPR, CES, MSH, vol. 19(38), pages 165-216, 04. [Downloadable!] (restricted)
  18. Joseph E. Gagnon, 2005. "Currency crashes and bond yields in industrial countries," International Finance Discussion Papers 837, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  19. Guillermo A. Calvo, 2005. "Crises in Emerging Market Economies: A Global Perspective," NBER Working Papers 11305, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Oral Williams & Tracy Polius & Hazel Selvon, 2001. "Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone: A Comparative Analysis," IMF Working Papers 01/104, International Monetary Fund. [Downloadable!]
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  22. Jaewoo Lee, 2004. "Insurance Value of International Reserves: An Option Pricing Approach," IMF Working Papers 04/175, International Monetary Fund. [Downloadable!]
  23. Eduardo Levy Yeyati, 2004. "Dollars, Debt and the IFIs: Dedollarizing Multilateral Lending," Business School Working Papers dedollmultlending, Universidad Torcuato Di Tella. [Downloadable!]
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  25. Luis J. Álvarez & Ignacio Hernando, 2004. "Price setting behaviour in Spain: stylised facts using consumer price micro data," Banco de España Working Papers 0422, Banco de España. [Downloadable!]
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  26. Barry Eichengreen & Muge Adalet, 2005. "Current Account Reversals: Always a Problem?," NBER Working Papers 11634, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Imbs, Jean & Mauro, Paolo, 2007. "Pooling Risk Among Countries," CEPR Discussion Papers 6461, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Joshua Aizenman & Jaewoo Lee, 2006. "Financial Versus Monetary Mercantilism-Long-run View of Large International Reserves Hoarding," NBER Working Papers 12718, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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