IMF: reserve managers’ ‘procyclical’ strategies exacerbated crisis
The abrupt end of central bankers' decade-long diversification of official reserves into riskier investments likely contributed to the funding problems of the banking sector during the crisis, the IMF says in a research paper out Monday.
The research estimates that reserve managers pulled about $500 billion of deposits and other investments from the banking sector. Although clearly not the main cause, this procyclical investment behavior was, the Fund says, likely to have contributed to the
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