E-Book, Englisch, Band Band 320, 7 Seiten
E-Book, Englisch, Band Band 320, 7 Seiten
Reihe: Aus der Reihe: e-fellows.net stipendiaten-wissen
ISBN: 978-3-656-06202-8
Verlag: GRIN Publishing
Format: PDF
Kopierschutz: Kein
element that describes a run on the foreign reserves of the central bank. Firstly, agents in the economy run on domestic banks and change bank deposits into domestic currency. Secondly, they escape into hard currencies because they fear that exchange rate movements lower the real value of the domestic currency. This challenges foreign reserves of central banks, such that the central bank ?nally cannot provide any additional foreign reserves to the domestic banking system. To guarantee that foreign reserves are sufficient for all agents in the country central banks started building up large foreign reserves to self-insure against ?nancial fragilities.