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International Reserves and the Financial Crisis: Monetary Policy Matters


  • Sona Benecka

    () (University of Finance and Administration/Czech National Bank)


The global financial crisis in 2008 and 2009 renewed interest for the role of international reserves in preventing and mitigating currency crises. The findings usually support the view that higher (or excess) reserves provided insurance against currency instability, which is considered as a good measure for evaluation how successful countries were in international comparison. Large depreciation of the currency is even explained as a fear of losing international reserves. But in case of inflation targeting countries (IT), which during the crisis witnessed sharp depreciations, this may be of a limited value. This paper enlighten the importance of monetary policy regime in estimating the level of international reserves and extends the current literature with the discussion on central bank credibility.

Suggested Citation

  • Sona Benecka, 2012. "International Reserves and the Financial Crisis: Monetary Policy Matters," ACTA VSFS, University of Finance and Administration, vol. 6(1), pages 25-43.
  • Handle: RePEc:prf:journl:v:6:y:2012:i:1:p:25-43

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    foreign exchange reserves; inflation targeting; crisis;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions


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