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Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone: A Comparative Analysis

Author

Listed:
  • Mr. Hazel Selvon
  • Ms. Tracy Polius
  • Mr. Oral Williams

Abstract

The paper presents a comparison of the gains from the pooling of reserves, and hence reserve variability, in the Eastern Caribbean Currency Union (ECCU) and the CFA franc zone. The results indicate that countries within the ECCU area have achieved greater balance of payments protection than the CFA zone countries from the pooling of reserves. Unanticipated changes in the terms of trade lowered reserves in the CFA relative to the ECCU, which may reflect a greater reliance on primary commodities in the CFA compared with services in the ECCU.

Suggested Citation

  • Mr. Hazel Selvon & Ms. Tracy Polius & Mr. Oral Williams, 2001. "Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone: A Comparative Analysis," IMF Working Papers 2001/104, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/104
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    References listed on IDEAS

    as
    1. Oral Williams & Wayne Sandiford & Aldrin Phipps, 1999. "Banana price shocks and adjustment within a unified currency area," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1455-1466.
    2. repec:bla:econom:v:40:y:1973:i:159:p:291-98 is not listed on IDEAS
    3. Paul Cashin & Hong Liang & C. John McDermott, 2000. "How Persistent Are Shocks to World Commodity Prices?," IMF Staff Papers, Palgrave Macmillan, vol. 47(2), pages 1-2.
    4. John F. O. Bilson & Jacob A. Frenkel, 1979. "Dynamic Adjustment and the Demand for International Reserves," NBER Working Papers 0407, National Bureau of Economic Research, Inc.
    5. Cashin, Paul & McDermott, C. John & Pattillo, Catherine, 2004. "Terms of trade shocks in Africa: are they short-lived or long-lived?," Journal of Development Economics, Elsevier, vol. 73(2), pages 727-744, April.
    6. Seraphin Fouda & David Stasavage, 2000. "The CFA Franc Zone After EMU: Status Quo, Reform, or Dissolution?," The World Economy, Wiley Blackwell, vol. 23(2), pages 221-233, February.
    7. Lizondo, JoseSaul & Mathieson, Donald J., 1987. "The stability of the demand for international reserves," Journal of International Money and Finance, Elsevier, vol. 6(3), pages 251-282, September.
    8. Mr. Stéphane Cossé & Mr. Johannes Mueller & Mr. Jean Le Dem & Mr. Jean A. P. Clément, 1996. "Aftermath of the CFA Franc Devaluation," IMF Occasional Papers 1996/004, International Monetary Fund.
    9. Stasavage, David, 1997. "The CFA Franc Zone and Fiscal Discipline," Journal of African Economies, Centre for the Study of African Economies, vol. 6(1), pages 132-167, March.
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    Citations

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    Cited by:

    1. Titelman Kardonsky, Daniel & Machinea, José Luis, 2007. "Less volatile growth?: the role of regional financial institutions," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    2. Mr. Romain M Veyrune, 2007. "Fixed Exchange Rates and the Autonomy of Monetary Policy: The Franc Zone Case," IMF Working Papers 2007/034, International Monetary Fund.
    3. Suman Basu & Ran Bi & Prakash Kannan, 2010. "Regional reserve pooling arrangements," Proceedings, Federal Reserve Bank of San Francisco, issue Oct.
    4. Mr. Pablo F Druck & Mr. Mario Dehesa, 2008. "The Eastern Caribbean Central Bank: Challenges to an Effective Lender of Last Resort," IMF Working Papers 2008/214, International Monetary Fund.
    5. Barry Eichengreen, 2007. "Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?," Open Economies Review, Springer, vol. 18(1), pages 27-52, February.
    6. International Monetary Fund, 2015. "St. Kitts and Nevis: 2015 Article IV Consultation-First Post-Program Monitoring Program Monitoring Discussions-Press Release; and Staff Report," IMF Staff Country Reports 2015/248, International Monetary Fund.
    7. Tajul Ariffin Masron & Zulkornain Yusop, 2009. "Reserve Pooling And Its Implication On Optimum Currency Area In Asean," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 54(02), pages 299-312.
    8. De Bromhead, Alan & Jordan, David & Kennedy, Francis & Seddon, Jack, 2021. "How does international monetary leadership end? The Sterling Area revisited," QUCEH Working Paper Series 21-02, Queen's University Belfast, Queen's University Centre for Economic History.
    9. Brahim Razgallah, 2004. "La théorie des ZMO s'applique-t-elle aux pays en développement?," International Finance 0403003, University Library of Munich, Germany.

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