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Conference Paper
Regional reserve pooling arrangements
Recently, several emerging market countries in East Asia and Latin America have initiated intra-regional reserve pooling mechanisms. This is puzzling from a traditional risk-diversification perspective, because country-level shocks are more correlated within rather than across regions. This paper provides a novel rationale for intra-regional pooling: if non-contingent reserve assets can be used to support production during a crisis, then a country's reserve accumulation decision affects not only its own production and consumption, but also its trading partners. If consumption through terms of ...