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Message from ADB's President
Contributors
Acknowledgements

Executive Summary and Recommendations
Jeffrey D. Sachs, Masahiro Kawai, Jong-Wha Lee, and Wing Thye Woo

Paper Summaries (full papers downloadable)

International Monetary Advisory Group

  1. Global Financial Crisis, its Impact on India and the Policy Response
    Nirupam Bajpai
  2. To What Extent Should Capital Flows be Regulated?
    Maria Socorro Gochoco-Bautista
  3. The Case for a Further Global Coordinated Fiscal Stimulus
    Willem Buiter
  4. Managing a Multiple Reserve Currency World
    Barry Eichengreen
  5. From the Chiang Mai Initiative to an Asian Monetary Fund
    Masahiro Kawai
  6. An Asian Currency Unit for Asian Monetary Integration
    Masahiro Kawai
  7. The International Monetary System at a Crossroad
    Felipe Larrain B.
  8. Towards a New Global Reserve System
    Joseph Stiglitz
  9. A Realistic Vision of Asian Economic Integration
    Wing Thye Woo
  10. An Asian Monetary Unit?
    Charles Wyplosz
  11. Will US fiscal Deficits Undermine the Role of the Dollar as Global Reserve Currency? If So, Should US Fiscal Policy be geared to Preserving the International Role of the Dollar?
    Yongding Yu

International Monetary Working Group

  1. International Reserves and Swap Lines: the Recent Experience
    Joshua Aizenman, Donghyun Park and Yothin Jinjarak
  2. The Future of the Global Reserve System
    Daniel Gros, Cinzia Alcidi, Anton Brender, and Florence Pisani
  3. Renminbi Policy and the Global Currency System
    Yiping Huang
  4. Will the Renminbi Emerge as an International Reserve Currency?
    Jong-Wha Lee
  5. Asia's Sovereign Wealth Funds and Reform of the Global Reserve System
    Donghyun Park and Andrew Rozanov
  6. Reforming International Monetary System
    Kanhaiya Singh
  7. Designing a Regional Surveillance Mechanism for East Asia: Lessons from IMF Surveillance
    Shinji Takagi

« 12. International Reserves and Swap Lines: the Recent Experience 14. Renminbi Policy and the Global Currency System »

13. The Future of the Global Reserve System

Daniel Gros, Cinzia Alcidi, Anton Brender, and Florence Pisani

In the de facto reserve system from 2000-09, emerging countries with a high savings propensity exported huge amounts of savings through the accumulation of reserves. The reserve currency country has been the main importer of those savings and hence, the main supplier of the accumulated reserves. The transatlantic financial system provided a complex web of risk-taking chains which assumed most of the risks arising from the fact that while ultimate borrowers (US households) supplied risky assets, savers required safe assets. The excess risk-taking that took place in the Western financial system is thus closely related to the accumulation of reserves observed during this period.

The authors also explore the prospects for the next decade by asking the following questions: will reserves continue to grow and will the mismatch between assets supplied and demanded be overcome by the huge expansion of public debt? What are the obstacles to currency diversification by reserve accumulators? They conclude that reserve-accumulating countries can help the reserve system to work better by providing more information about the nature of the assets they accumulate and by diversifying into risky assets. Reform of the reserve system should aim at making better use of the excess savings in emerging market economies.


« 12. International Reserves and Swap Lines: the Recent Experience 14. Renminbi Policy and the Global Currency System »