TY  - JOUR
AU  - Eichengreen,Barry
TI  - Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America? 
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12451
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12451
L1  - http://www.nber.org/papers/w12451.pdf
N1  - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
AB  - The accumulation of international reserves by emerging markets raises the question of how to best utilize these funds.  This paper explores two routes through which the pooling of reserves could enhance stability and welfare. First, the reserve pool could be used for emergency lending in response to sudden stops.  Second, a portion of the reserve pool along with borrowed funds could be used to purchase contingent debt securities issued by governments and corporations, helping to solve the first-mover problem that limits the liquidity of markets in these instruments and hinders their acceptance by private investors.  This paper argues that the second option is more likely to be feasible and productive.
ER  -