Procyclicality in Central Bank Reserve Management: Evidence From the Crisis

The aim of the article is to analyze the foreign exchange reserves of the European Central Bank and the methods of their modern management. As a result of the study, it was proven that when implementing foreign reserve management policy, the European Central Bank and national central banks should pursue the objectives of the current monetary policy for future generations. Foreign exchange reserves are a special good that only the current generation and the current government cannot use. The character of the article implies different research methods: analysis of the sources of law, legal dogmatic, comparative dogmatic method. The analysis carried out as part of the study indicates that management of foreign exchange reserves of ECB has an impact on intergenerational justice.

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

AEA Papers and Proceedings ◽

10.1257/pandp.20181065 ◽

2018 ◽

Vol 108 ◽

pp. 542-546 ◽

Cited By ~ 3

Author(s):

Gita Gopinath ◽

Jeremy C. Stein

Keyword(s):

Central Bank ◽

Exchange Rates ◽

Foreign Exchange ◽

Banking System ◽

Foreign Exchange Reserves ◽

Reserve Currency ◽

Bank Funding ◽

Cross Country ◽

Currency Composition ◽

Bank Reserve

We develop a model that shows how the currency denomination of a country's imports influences the funding structure of its banking system, and in turn, the currency composition of its central bank's reserve holdings. The link between the dollar's role in bank funding and its role as a central bank reserve currency is stronger when the country's fiscal capacity is limited, and when exchange rates are volatile. In the data, there is a pronounced cross-country relationship between the fraction of imports that are dollar invoiced, and the fraction of central-bank foreign-exchange reserves that are held in dollars.

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Revised Guidelines for Foreign Exchange Reserve Management

Policy Papers ◽

10.5089/9781498342377.007 ◽

2013 ◽

Vol 2013 (1) ◽

Cited By ~ 4

Author(s):

Keyword(s):

Central Bank ◽

Working Group ◽

Management Framework ◽

Risk Management Framework ◽

Management Objectives ◽

Reserve Management ◽

Monetary Authorities ◽

Bank For International Settlements ◽

The Impact ◽

Small Working

The 2013 revision of the Guidelines was carried out by the IMF staff, supported by a small Working Group of central banks and monetary authorities from China, India, Israel, Italy, Mexico, Japan, Russia, Saudi Arabia, Switzerland, the European Central Bank, and the Bank for International Settlements, and The World Bank acting as reviewer in the process. Mr. Franco Passacantando, Managing Director at the Bank of Italy, chaired this Working Group. The revisions to the Guidelines mainly concentrate on: (i) reserve management objectives and strategy, including analyzing and managing risks in the context of reserve diversification; (ii) transparency and accountability, while avoiding reserve management decisions being dictated by the prevailing accounting framework; (iii) institutional and organizational framework issues, especially on avoiding possible inconsistencies between reserve management and other central bank operations; and (iv) the risk management framework, including taking into account ex-ante assessments of the impact of reserve investments on financial markets and building internal credit risk assessment systems to assess counterparty risks

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