Page 23 - Ekonomija i Biznis_septemvri 2016.indd
P. 23
Graph 2: Foreign-exchange reserves of selected developed countries and developing countries, 2015 РУБРИКА
Hence, as graph 2 shows, the greatest hold- swaps with the FED. Indeed, what is only
ers of foreign-exchange reserves are pre- left at their disposal is the financing pro-
cisely the developing countries: unlike Ger- vided by the International Monetary Fund,
many and France, whose foreign-exchange which on the other hand imposes numer-
reserves are 36 billion each, Indonesia and ous requirements which the developing
Mexico dispose of reserves of 100 and 167 countries often understand as involvement
billion; contrary to the size of the econo- in the national politics or limitation of
mies, Turkey and the United Kingdom have the sovereignty. Therefrom, instead of be-
similar foreign-exchange reserves (91 and ing exposed to the mercy of the developed
95 billion), and the foreign-exchange re- countries, the developing countries prefer
serves of Brazil, India and Russia are nine to rely on their own foreign-exchange re-
or ten times greater than the ones of Ger- serves.
many. Of the developed countries, only Ja-
pan has unusually great foreign-exchange At last, when we speak of foreign-ex-
reserves. change reserves, an inevitable issue that
arises is their adequate or optimal level. In
There are several factors that cause this regard, the central banks often point
greater need of foreign-exchange reserves out that the foreign-exchange reserves are
of the developing countries. For example, at the required level providing coverage of
their economies (and their financial mar- the four-month or five-month import of
kets) are much more unstable compared the country, etc. Unfortunately, here we
to the developed countries, they are more encounter a question which does not have
exposed to greater changes in the exchange a correct answer: there is no economic
relations and to greater turnabouts in cap- theory of the optimal level of foreign-ex-
ital flows, and often these sources of risk change reserves or an empirical formula
are accompanied by political instability. about their adequate level. Of course, usu-
As a consequence, these countries are per- ally some “standards” are indicated, how-
ceived as riskier by the investors, and their ever they are only approximate and they
currencies are exposed to greater pressure provide only a partial representation of
because their central banks are forced to the problem. For example, the measure
accumulate greater foreign-exchange re- “monthly coverage of import” refers only
serves. Furthermore, in an event of urgent to trade exchange of the country and it is
needs, the developing countries also have not relevant for the countries with an open
reduced access to the multilateral mech- capital account.
anisms for financing such as the dollar
Actually, precisely due to the lack of an
September 2016 23
