Abstract
THE ANALYSIS OF THE ROLE OF RESERVES in the monetary system has generally focused on the demand for reserves. That is, the decisions of individual countries to hold various types of reserve assets and changes in these preferences are seen as affecting prices and economic activity in the world economy. One well-known conclusion of this type of research is that the demand for reserves has apparently not changed significantly in recent years despite very important changes in exchange rate regimes, international capital markets, and a number of other institutional developments.1 The apparent stability in demand for reserves might suggest that the role of reserves in the system has also not changed greatly.
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