Abstract
Although savings of international reserves are widely recognized as a benefit accruing from the operations of regional payments unions and clearing facilities, there has been no systematic effort to measure the size of reserve savings, and no attempt whatsoever to measure the impact of these savings on the economies of member countries. In this chapter, we propose a method to estimate the value to RPA participants of reductions in necessary holdings of international reserves. In Section 6.1 we examine critically the assumptions and shortcomings of the existing literature. In Section 6.2 we build on the theoretical analysis of Chapters 3 and 4 to construct a method of measuring the potential and actual savings of international reserves from the multilateral clearing mechanism of proposed or existing clearing facilities. In Section 6.3 we develop a method of measuring the additional savings of international reserves due to the extension of medium-term credit in a payments union. Finally, in Section 6.4 we draw from the empirical literature on the opportunity cost of holding international reserves to propose an appropriate measure of the impact of such reserve savings on the national income of member countries and of the region as a whole.
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© 1997 Byron G. Auguste
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Auguste, B.G. (1997). Measuring Savings of International Reserves. In: The Economics of International Payments Unions and Clearing Houses. St Antony’s Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-25517-7_7
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DOI: https://doi.org/10.1007/978-1-349-25517-7_7
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-25519-1
Online ISBN: 978-1-349-25517-7
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