Existing theory on the need for reserves, reviewed in Part II, does not constitute a fully integrated and systematic body of literature. Although many valuable contributions have been made in recent years in the field of reserve need theory, and a number of review articles have appeared, the subject as a whole has not been treated within a systematic framework in a single publication. Quantitative and qualitative methods of analysis, as well as the need for reserves of individual countries and of the world as a whole have generally been treated separately. Furthermore, areas such as the need for reserves under flexible exchange rates, as well as the need for international credit facilities and its relation to reserve needs have been rather scantily analyzed. Part III of this study (chapters 9–12) contains an attempt to systemize existing theories, to provide a synthesis of various approaches and to elaborate on existing theory in a number of instances. Areas in which it has been particularly attempted to carry the analysis somewhat beyond its present state are the need for reserves under flexible exchange rates, the reserve needs of country groups, the symptomatic method, and the optimal mix between reserves and credit facilities.
KeywordsExchange Rate Monetary Authority International Reserve International Liquidity International Monetary System
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- 1.Cf. p. 15 above.Google Scholar
- 2.This question is examined in section viii of chapter 10.Google Scholar
- 1.Cf. pp. 95–97 above.Google Scholar
- 2.Cf. pp. 97, 98, 110 and 114 above.Google Scholar
- 1.The argument has been expressed by Fleming in terms of reserve growth rather than reserve levels; cf. pp. 98, 99 above.Google Scholar