Taking Stock of Risk Management Techniques for Sovereigns

35 Pages Posted: 30 Apr 2005

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Date Written: April 2005

Abstract

This paper reviews the current state of affairs and thinking on external risk management for developing countries. It tries to identify the reasons behind the limited risk management by sovereigns. Perverse incentives arising from a too generous international safety net, limited access to international financial markets by developing countries arising from low creditworthiness, a limited supply of financial risk management tools suited to developing countries, and a poor supply of skills have inhibited risk management. Another constraint has been the limited attention given to the strategic objectives for risk management. Going forward, the paper identifies actions by international financial markets, countries and international financial institutions that can help improve risk management.

Suggested Citation

Claessens, Stijn, Taking Stock of Risk Management Techniques for Sovereigns (April 2005). World Bank Policy Research Working Paper No. 3570. Available at SSRN: https://ssrn.com/abstract=712625

Stijn Claessens (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

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