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Shrinking Reserves

By experts and staff

Published
  • Benn SteilCFR Expert
    Senior Fellow and Director of International Economics
  • Dinah Walker
    Analyst, Geoeconomics

The experience of the 1997-98 East Asian crisis encouraged many developing countries to accumulate vast sums of foreign exchange reserves in order to self-insure against future crises. As our chart indicates, as of the end of November, emerging market countries were burning through these reserves. This crisis will put to test previous thoughts about necessary reserve levels and the efficacy of self-insurance.

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