Reserve Accumulation: Implications for Global Capital Flows and Financial Markets

8 Pages Posted: 17 Nov 2004

See all articles by Thomas Klitgaard

Thomas Klitgaard

Federal Reserve Bank of New York

Matthew Higgins

Federal Reserve Bank of New York

Abstract

Many central banks - particularly those in Japan and the emerging Asian nations - have been building up their holdings of foreign currency assets. These holdings, known as foreign exchange reserves, may help countries stabilize their currencies, but they can also lead to investment losses for the central banks. The large share of dollar assets among reserve holdings has made foreign central banks important players in U.S. financial markets.

Keywords: central bank reserves, capital flows, sterilization

JEL Classification: F32, F34

Suggested Citation

Klitgaard, Thomas and Higgins, Matthew, Reserve Accumulation: Implications for Global Capital Flows and Financial Markets. Current Issues in Economics and Finance, Vol. 10, No. 10, September/October 2004. Available at SSRN: https://ssrn.com/abstract=621622

Thomas Klitgaard (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Matthew Higgins

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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