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Mirage Of The International Reserves


  • Pop, Napoleon

    (Centre for Financial and Monetary Research “Victor Slăvescu”, Romanian Academy)


The international reserves of the central bank seem to become a matter of unprofessional debate, creating the false illusion that this is a mere accumulation of value, without any meaningful use in managing the current business cycle of an economy through an appropriate policy, e.g. monetary policy. While there are people that even dare to suggest what a government should do with the reserves accumulated in the safe of the central bank, the danger to let such messages to fly around touches one of the delicate issue of the independence of a the central bank within an European context of integration. In between, we can see how easy is to mingle with serious things, as the role of the international reserves even for the monopoly right of a central bank to issue paper money, when she is buying hard currency, or their importance when we talk about the credibility of the institution for the citizens or for investors. In the article, we just try to insist on some theoretical and practical aspects related to the meaning of the international reserves of the central bank in carrying her role in preserving price stability, their connection with the stance of the monetary policy and the instruments used for the conducting credible anchored inflation expectations. Talking about international reserves we cannot skip out the presence of the gold bullions as part of them, thinking that the mirage of that mix - hard currency and the purest gold metal - deserves to be discussed, but not entirely unveiled, as the gold remains, and the latest quotations of it on international markets confirm, one of the best asset.

Suggested Citation

  • Pop, Napoleon, 2011. "Mirage Of The International Reserves," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 15(1), pages 133-150.
  • Handle: RePEc:vls:finstu:v:15:y:2011:i:1:p:133-150

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    central bank; international reserves; liquidity; price stability; monetary policy;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies


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