Pooled reserves could improve global financial safety net – paper
‘Synthetic reserve deposit’ could cut costs and improve performance, authors say
Pooling foreign exchange reserves into a “synthetic reserve deposit” (SRD) could overcome some of the drawbacks of holding large reserves at the national level, economists at the International Monetary Fund say in a new working paper.
The paper’s authors – Giovanni Dell’Ariccia, Pascal Farahmand, Pierre-Olivier Gourinchas, Istvan Mak, Adrian Peralta-Alva and Francisco Roldan – note that there is a worldwide “scarcity of safe assets”. Countries hold reserves to self-insure against external risk
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