Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/53667 
Year of Publication: 
2011
Series/Report no.: 
ADBI Working Paper No. 297
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Motivated by the unprecedented rise of swap agreements between the central banks of developed economies and their developing economy counterparts, this paper evaluates Asian swap arrangements and their association with the build-up of foreign reserves prior to the 2008-2009 global financial crisis. The evidence suggests that there is a limited scope for swaps to substitute for reserves. Furthermore, the selectivity of the swap lines indicates that only countries with significant trade and financial linkages can expect access to such ad hoc arrangements, on a case by case basis. Moral hazard concerns suggest that the applicability of these arrangements will remain limited. However, deepening swap agreements and regional reserve pooling arrangements may weaken the precautionary motive for reserve accumulation.
JEL: 
F15
F31
F32
Document Type: 
Working Paper

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