Shrinking Reserves

The experience of the 1997-98 East Asian crisis encouraged many developing countries to accumulate vast sums of foreign exchange reserves in order to self-insure against future crises. As our chart indicates, as of the end of November, emerging market countries were burning through these reserves. This crisis will put to test previous thoughts about necessary reserve levels and the efficacy of self-insurance.

Economist: Shrinking Cushion

Economist: Russia’s Economy-The Flight from the Rouble

Jung-a: S. Korea Reserves Fall as Won Weakens

Subramanian: Self-insurance-The Debate India Must Have

Mallaby: Supersize the IMF