(l) Other reserves

Even the stronger banks are being pressed to increase their capital reserves.

Other reserves comprise the following

And, to address volatile capital flows, countries should increase exchange rate flexibility, maintain adequate international reserves, and implement carefully designed capital controls.

Measured by the dollar index, therefore, capital losses on China s foreign exchange reserves are inevitable.

Artificially low exchange rates, restrictions on capital flows, and excessively large currency reserves all create global imbalances.

Reserves and fund balances available for programme activities amounted to 115 million (reserves and fund balances for the Working Capital and Guarantee Fund and the Annual and Supplementary Programme Funds).

Under option one, UNOPS relies on short term, rapid return portfolios to build its investment capital and reserves.

If developing countries allocate only 1 of their foreign exchange reserves to the paid in capital of regional and sub regional institutions, this would amount to 50 billion at current levels of reserves.

Human capital not natural resources, production capacity, or financial reserves should constitute the foundation of Russian and European development policies.

Banks are obliged to hold reserves, maintain capital, and pay deposit insurance to ensure that they can honor their deposits.

And what was true of China was also true of other emerging market countries receiving capital inflows. These countries foreign reserves, mainly held in US securities, topped 8 trillion at their peak last year.

Moreover, the reserves built up over the preceding decade were, in many cases, used to offset some of the capital outflows.

Fearing a weaker peso, spooked investors demand dollars. Capital is flowing out of the country, and official reserves are slowly being depleted.

The unprecedented increase in developing countries foreign exchange reserves is due both to their current account surpluses and large net capital inflows.

Internationally agreed rules stipulate that banks must create capital reserves commensurate to the risks that they take when they invest depositors savings.

Bank capital is not cash reserves that must be set aside it is unborrowed money that can be used to make loans.

First, unlike in some other countries, Chinese commercial banks are paid reasonable interest rates on required reserves, except for the extra reserves that they hold.

Today, currencies other than the dollar account for 40 of identified international reserves.

A country with current account and capital account surpluses and increasing foreign exchange reserves normally sees an excessive money supply and high inflation.

If money market funds had to maintain capital reserves, industry representatives argued, yields to investors would decline and the industry s profits would suffer.

Many countries continue to accumulate high levels of precautionary reserves, especially to avoid future crises stemming from reversals on their capital and trade accounts.

Potential borrowers have been accumulating massive reserves and pooling them regionally to protect themselves against shocks and speculative capital, but not at the Fund s urging.

They have already attempted to erect defenses against the potentially destabilizing effects of advanced country monetary policy by accumulating foreign exchange reserves and establishing capital controls.

Commercial banks could hold them without setting aside any capital reserves, and the European Central Bank (ECB) accepted them on equal terms at its discount window.

To minimize that risk, the Troika reserves currently devoted to the Greek bailout should be used to limit exchange rate overshooting capital controls would help, too.

There has been a continued increase in the costly build up of precautionary reserves as a form of self insurance against volatility in international capital flows.

The latter regions have more than substituted for the decline in natural capital by accumulating other capital assets.

Petroleum and other resources Venezuela has the largest oil reserves, and the eighth largest natural gas reserves in the world, and consistently ranks among the top ten world crude oil producers.

Reserves

In that case, China would have to accept an export slowdown and an increase in unemployment in order to avoid huge capital losses on its dollar reserves.

But capital is flowing in from other countries as well.

The country has the world's largest natural gas reserves, the 8th largest oil reserves, and the second largest coal reserves.

Africa s natural gas reserves amount to about 8 of global reserves.

The reserves that the Fed and almost all other major central banks are building will eventually be used.

Despite the theoretical possibility of capital being sent over vast distances to other parts of the world, much capital remained local.

The Swiss have large reserves, but are so interlinked with global capital markets that exchange controls are not a realistic option. Most other Western countries, certainly the United States and the United Kingdom, are in no position to invest heavily to maintain a particular exchange rate.

For central banks, holding reserves in the same currency as other central banks means holding the most liquid asset.

In other words, France uses African reserves to finance part of its budget deficit at a concessional interest rate.

Fifth, and finally, major holders of reserves must agree to deploy them in a way aimed at maintaining global financial stability and preventing excessively volatile exchange rate and capital movements.

To stop this accumulation of foreign exchange reserves, and thus minimize China s welfare and capital losses, the simplest solution would be for the PBOC to call a halt to intervention.

Emerging economies many of which use large trade surpluses to drive GDP growth and supplement their foreign exchange reserves with the resulting capital inflows are leading buyers of US debt.

(j) Operating reserves

South African firms have used their relatively lower cost of capital to invest in other African countries where capital markets were not developed.

China has a two tier system in which the capital account is strictly controlled most other currencies don t distinguish between current and capital accounts.