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International monetary asymmetries and the central bank


  • Angel García Banchs
  • Luis Mata Mollejas


In this paper, we argue that the current international monetary system is fully asymmetric, as it divides the world among reserve issuing economies (RIEs) and reserve earning economies (REEs). Thus, monetary theory, we argue, should take into account whether or not the central bank issues an international reserve currency, as that would largely determine its balance sheet structure, interest rate-targeting procedure, and the elasticity of monetary policy and of the exchange rate regime. The reason is plain: as opposed to RIEs, the central bank in REEs must target a minimum stock of foreign currency assets, as the local currency does not circulate abroad.

Suggested Citation

  • Angel García Banchs & Luis Mata Mollejas, 2010. "International monetary asymmetries and the central bank," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 32(3), pages 467-496, April.
  • Handle: RePEc:mes:postke:v:32:y:2010:i:3:p:467-496

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    References listed on IDEAS

    1. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
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    Cited by:

    1. Shrestha, Prakash Kumar, 2012. "Banking systems, central banks and international reserve accumulation in East Asian economies," Economics Discussion Papers 2012-48, Kiel Institute for the World Economy (IfW).
    2. Chandan Sharma & Sunny K Singh, 2014. "Determinants of International Reserves: Empirical Evidence from Emerging Asia," Economics Bulletin, AccessEcon, vol. 34(3), pages 1696-1703.
    3. Prakash Kumar Shrestha, Ph.D., 2016. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," NRB Working Paper 32/2016, Nepal Rastra Bank, Research Department.
    4. Prakash Shrestha, 2017. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," Working Papers id:12166, eSocialSciences.
    5. Shrestha, Prakash Kumar, 2013. "Banking Ssystems, central banks and international reserve accumulation in East Asian economies," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-29.


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