Research
BPEA | Spring 2007International Reserves in Emerging Market Countries: Too Much of a Good Thing?
Olivier Jeanne
Olivier Jeanne
International Monetary Fund
discussants:
Lawrence H. Summers and
Lawrence H. Summers
Charles W. Eliot University Professor and President Emeritus
- Harvard University
@LHSummers
Joshua Aizenman
Olivier Jeanne
International Monetary Fund
Lawrence H. Summers
Charles W. Eliot University Professor and President Emeritus
- Harvard University
@LHSummers
Spring 2007
WITH INTERNATIONAL reserves four times as large, in terms of their GDP,
as in the early 1990s, emerging market countries seem more protected
than ever against shocks to their current and capital accounts. Some have
argued that this buildup in reserves might be warranted as insurance
against the increased volatility of capital flows associated with financial
globalization.1 Others view this development as the unintended consequence
of large current account surpluses and suggest that the level of
international reserves has become excessive in many of these countries.2