Examining the case for Reserve Pooling in East Asia: Empirical Analysis

Two features of East Asia?s recovery from the financial turmoil of 1997-98 appear to be rather paradoxical. First, the regional economies (except Hong Kong, China and Malaysia) have allowed a relatively greater albeit modest degree of variability of their currencies according to market conditions. Second, the regional monetary authorities have simultaneously appeared keen on bolstering reserves to historically high levels. This paper examines the subject of reserve management in the broader context of monetary cooperation in East Asia. The paper briefly reviews the factors that go into the determination of ?optimal reserves? in general, and specifically in the case of East Asia. It then goes on to investigate the gains, if any, to be reaped if the East Asian economies were to pool their reserves.Coverage Index, East Asia, Fiscal Costs, Foreign Exchange Reserves, Reserve Pooling, Reserve to Imports Ratio.