Optimal Reserves in the Eastern Caribbean Currency Union

Wendell Samuel, Emilio Pineda and Mario Dehesa

No 2009/077, IMF Working Papers from International Monetary Fund

Abstract: Recent turbulence in global and Caribbean regional financial markets underscore the importance of reassessing the adequacy of international reserves held by the Eastern Caribbean Central Bank (ECCB). Using the Jeanne (2007) optimization framework, this paper finds that international reserves held by the ECCB are generally adequate for a variety of external current account and capital account shocks. However, the ECCB would be challenged in the event of moderate to severe deposit outflows.

Keywords: WP; reserve; reserve cover rule; opportunity cost (search for similar items in EconPapers)
Pages: 20
Date: 2009-04-01
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Citations: View citations in EconPapers (4)

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