International reserves provided shelter from crisis, says Finland paper

International reserves provided important economic shelter to the global financial crisis, says a Bank of Finland discussion paper, published on November 2.

The author, Martin Feldkircher, finds no direct link between reserve accumulation and the severity with which a crisis is felt. However, he did find evidence that international reserves shaped countries' responses to the crisis, particularly when reserves were accumulated as the economy's credit expanded.

The reserves acted as a buffer to