BIS paper uncovers new evidence on FX reserve and capital flow link
Paper argues role of domestic investors is key
The actions of domestic investors are an important but widely overlooked factor in determining how capital flows respond to levels of foreign exchange reserves, according to a working paper that was published on October 1 by the Bank for International Settlements (BIS).
The paper marks the latest effort in the BIS's bid to persuade economists to study gross, not net, capital flows, and points to a "previously undocumented" benefit of holding reserves.
Authored by economists Enrique Alberola of
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