IMF Working Papers Volume 2001 Issue 104: Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone: A Comparative Analysis (2001)

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Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone: A Comparative Analysis

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Mr. Hazel Selvon

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Ms. Tracy Polius

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Mr. Oral Williams

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Series:: IMF Working Papers

Volume/Issue:: Volume 2001: Issue 104

Language:: English

Publication Date:: 01 Aug 2001

DOI:: https://doi.org/10.5089/9781451852769.001

ISBN:: 9781451852769

ISSN:: 1018-5941

Pages:: 31

Keywords:: WP; CFA franc zone; average cost; balance of payments; ECCU countries reserve; foreign exchange; reserve variability; ECCU; reserve pooling; reserve management policy; variability benefit; imputed reserve; terms of trade shock; reserves of the ECCU; reserve variation; ECCU country; hypothetical reserves ECCU; opportunity cost; coverage ratios ECCU; Reserve positions; Terms of trade; Monetary unions; Reserves management; Reserve assets; West Africa; Caribbean

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2001: Issue 104

Language:: English

Publication Date:: 01 Aug 2001

DOI:: https://doi.org/10.5089/9781451852769.001

ISBN:: 9781451852769

ISSN:: 1018-5941

Pages:: 31

Keywords:: WP; CFA franc zone; average cost; balance of payments; ECCU countries reserve; foreign exchange; reserve variability; ECCU; reserve pooling; reserve management policy; variability benefit; imputed reserve; terms of trade shock; reserves of the ECCU; reserve variation; ECCU country; hypothetical reserves ECCU; opportunity cost; coverage ratios ECCU; Reserve positions; Terms of trade; Monetary unions; Reserves management; Reserve assets; West Africa; Caribbean

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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The paper presents a comparison of the gains from the pooling of reserves, and hence reserve variability, in the Eastern Caribbean Currency Union (ECCU) and the CFA franc zone. The results indicate that countries within the ECCU area have achieved greater balance of payments protection than the CFA zone countries from the pooling of reserves. Unanticipated changes in the terms of trade lowered reserves in the CFA relative to the ECCU, which may reflect a greater reliance on primary commodities in the CFA compared with services in the ECCU.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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