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 res...

This article documents a delay in the public release of Mexican international reserve data in the months before Mexico’s debt crisis at the end of 1994. The article establishes that in that year investors did not know the level of Mexican reserves before October; yet this lack of information did not seem to reduce investor confidence in the Mexican economy. The article does not establish whethe...

A quantitative framework is developed to bring forward the insurance motive for holding international reserves. The insurance value of reserves is quantified as the market price of an equivalent option that provides the same insurance coverage as the reserves. This quantitative framework is applied to calculating the cost of a regional insurance arrangement (e.g. an Asian Monetary Fund) and to ...

Bargaining, Strategic Reserves, and International Trade in Exhaustible Resources Author(s): Vincent P. Crawford, Joel Sobel and Ichiro Takahashi Reviewed work(s): Source: American Journal of Agricultural Economics, Vol. 66, No. 4 (Nov., 1984), pp. 472-480 Published by: Oxford University Press on behalf of the Agricultural & Applied Economics Association Stable URL: http://www.jstor.org/stable/1...