The instability and inequities of the global reserve system / José Antonio Ocampo

This paper argues that the current global reserve system is inherently unstable due to the use of a national currency as the major international reserve currency, and the high demand for "self-insurance" by developing countries. The latter is due to the mix of highly pro-cyclical capital flows and the limited room to maneuver that developing countries have to manage counter-cyclical macroeconomic policies. Both features imply that the system is also inequitable. An important insight of the paper is that such inequities feed into the instability of current arrangements. Any meaningful reform of the system must therefore address these two interlinked features.
The Instability of the Global Reserve System -- The Links with the Instability of the Financial System -- The Effects of the Inherent Asymmetries of the Global Reserve System -- Conclusions and Policy Implications.

17 p. : graphs, table

Includes bibliographical references (p. 15-17).