The accumulation of foreign exchange by central banks: Fear of capital mobility?

Autor(en): Steiner, Andreas
Stichwörter: ACCOUNT LIBERALIZATION; Business & Economics; Capital mobility; Economics; FINANCIAL GLOBALIZATION; FLOWS; GROWTH; International reserves; Macroeconomic trilemma; MODELS; OPTIMAL INTERNATIONAL RESERVES; PANEL-DATA; POLICIES; STABILITY; TRILEMMA
Erscheinungsdatum: 2013
Herausgeber: LOUISIANA STATE UNIV PR
Journal: JOURNAL OF MACROECONOMICS
Volumen: 38
Ausgabe: B
Startseite: 409
Seitenende: 427
Zusammenfassung: 
Central banks' foreign exchange holdings have increased significantly in the recent past. This article explains this development as a result of the liberalisation of international capital markets. First, central banks accumulate reserves in order to protect the economy from detrimental effects of sudden stops in capital flows and flow reversals. Second, central banks use the accumulation of reserves as a substitute for capital controls. Changes in reserves are a form to manage net capital inflows. They permit the central bank to preserve some leeway for an independent monetary and financial policy despite the classic policy trilemma. The empirical analysis of a large panel data set supports the hypothesis that the accumulation of reserves is the consequence of a ``fear of capital mobility'' suffered by central banks. (C) 2013 Elsevier Inc. All rights reserved.
ISSN: 01640704
DOI: 10.1016/j.jmacro.2013.08.002

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