Optimal Reserves in the Eastern Caribbean Currency Union

Dehesa, Mario; Pineda, Emilio; Samuel, Wendell

Download This Paper

Open PDF in Browser

Add Paper to My Library

Optimal Reserves in the Eastern Caribbean Currency Union

IMF Working Paper No. 09/77

22 Pages Posted: 28 Apr 2009

See all articles by Mario Dehesa

Wendell Samuel

International Monetary Fund (IMF) - Western Hemisphere Department

Date Written: April 2009

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: Reserves, Eastern Caribbean Currency Union, Emerging markets, Monetary unions, Capital flows, Economic models

Suggested Citation: Suggested Citation

Dehesa, Mario and Pineda, Emilio and Samuel, Wendell, Optimal Reserves in the Eastern Caribbean Currency Union (April 2009). IMF Working Paper No. 09/77, Available at SSRN: https://ssrn.com/abstract=1394777