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New concept of international reserve assets: Security, diversification and nonconventional approaches
https://doi.org/10.32609/0042-8736-2022-12-24-43
Abstract
The freezing of Russia’s international reserve assets, the world’s seventh largest, despite not being the first case of its kind, will have systemic impact on the way countries around the world treat their reserves. Financial sanctions have undermined confidence in traditional reserve currencies. A systemic and complete revision of the conceptual approaches to managing international reserve assets is due. The current framework of the international financial system does not offer any off-the-shelf solutions to enable safeguarding the integrity of reserves and maintaining macroeconomic stability. The paper proposes potential new approaches to the safety of reserve assets. It could be implemented through the diversification of instruments and operators. The paper examines several possible solutions that might complement/replace reserves in traditional reserve currencies, ranging from compromise solutions to unconventional ones: (1) expanding the use of existing tools which carry less risk, (2) introducing new instruments, and (3) changing the paradigm. The authors conclude that the resulting system will be more volatile, decentralized, complicated and expensive to manage. However, this is the price many countries would be willing to pay for the security of their reserves.
Keywords
foreign exchange reserves,
IMF,
macroeconomic stability,
global financial stability,
reserve currency
JEL: F02, F32, F33, F42, G15, H63
About the Authors
E. Y. Vinokurov
https://vinokurov.info/
Eurasian Fund for Stabilization and Development
Russian Federation
Eurasian Fund for Stabilization and Development
Russian Federation
Evgeny Y. Vinokurov, Ph.D. (econ.), Professor of the Russian Academy of Sciences, Chief Economist
Moscow
M. V. Grichik
Eurasian Fund for Stabilization and Development
Russian Federation
Russian Federation
Marina V. Grichik, Head of Technical Assistance and Publications Unit
Moscow
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For citations:
Vinokurov E.Y., Grichik M.V. New concept of international reserve assets: Security, diversification and nonconventional approaches. Voprosy Ekonomiki. 2022;(12):24-43. (In Russ.) https://doi.org/10.32609/0042-8736-2022-12-24-43
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