A solution to the reserves riddle

There has been an anomaly between what is in the national interest and what is in the global interest on the issue of reserves. However, this does not have to be so.

Growing consensus has emerged that a significant underlying cause of the current malaise was global imbalances. The savings of surplus countries found willing takers in the United States, notably the United States, pushing down world real interest rates globally and the resulting search for yield which spurred excessive risk

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