ACUMULACIóN DE RESERVAS INTERNACIONALES EN ECONOMíAS EMERGENTES

this document analyzes the rationality of keeping international reserves, which are used as a type of insurance in the event of external financing problems and to mediate in the type of exchange rate. here it is argued that it is not possible to separate both objectives. this explains why the use of other forms of insurance, although potentially cheaper, is note generalized. on the other hand, the fact that in practice the use of the international reserves is very low, even during the crisis periods, is evidence of the dissuasive role they have - just the fact of keeping them reduces financial vulnerability. the evidence for the subprime crisis is studied, finding that the financial strains were fewer in economies with high reserve level. finally, diverse forms of measuring the adequate reserve level are discussed and the variation of the reserves and the type of exchange rate are examined during the asian and subprime crisis in emerging economies.