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Monetary Autonomy in Select Asian Economies : Role of International Reserves

Author

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  • Hiroyuki Taguchi

    (Policy Research Institute)

  • Geethanjali Nataraj
  • Pravakar Sahoo

Abstract

This paper examines the trends in monetary autonomy and its interaction with financial integration, currency regime and foreign reserves for the past two decades in select Asian countries viz., Thailand, Korea, Indonesia, Philippines, and India. Our main findings are as follows : First, Thailand, Korea and Indonesia, who experienced the change in currency regime towards a floating regime, have lowered the sensitivities of their interest rates (have raised monetary autonomy) after the regime change, while India without any change in currency regime has continued to raise the sensitivities of its interest rates (has lowered monetary autonomy) in line with increased financial integration. Second, in all sample economies, the accumulation of foreign reserves has contributed to retaining monetary autonomy in terms of preventing the sensitivities of interest rates from rising. We speculate that their accumulation might take a role as an anchor for monetary autonomy to the emerging market economies facing fear of floating.

Suggested Citation

  • Hiroyuki Taguchi & Geethanjali Nataraj & Pravakar Sahoo, 2010. "Monetary Autonomy in Select Asian Economies : Role of International Reserves," Macroeconomics Working Papers 23116, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:macroe:23116
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    2. Chee-Hong Law, 2023. "The Impacts of International Reserves on Monetary Independence in Emerging Countries: An Asymmetric Analysis," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(1), pages 53-71, January.

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    More about this item

    Keywords

    monetary autonomy; financial integration; currency regime; foreign reserves; Asian emerging market economies; fear of floating;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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