The coexistence of three types of reserves assets

Abstract

The first Report of the Deputies of the Group of Ten and the parallel Report of the IMF from 1964 reached unanimous consensus on the basic deficiencies of the international monetary system and the general nature of the revolutionary reforms required for its satisfactory performance in the future. The three years that have elapsed since then have unfortunately failed to elicit any similar agreement on the concrete measures and commitments needed to implement the broad recommendations of the two reports. The present paper first summarises the already familiar considerations regarding the impact the existence of three types of reserve assets upon the growth of world reserves. It is then largely devoted to its equally important, but less generally perceived and understood, impact on the balance of payments adjustment process. In the concluding section the author offers answers to broader policy issues.

JEL: E42, F31, F33