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Market borrowings, reserves accumulations and borrowing costs (English)

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  • Market borrowings, reserves accumulations and borrowing costs (English)
  • COLACO, F.; DE KUIJPER, M.; EPD
  • World Bank (WB)


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Title Market borrowings, reserves accumulations and borrowing costs (English)
Similar Titles
Material Type Reports
Author(English)

COLACO, F.; DE KUIJPER, M.; EPD

Publisher

World Bank (WB)

Date 1981
Language English
File Type Link
Subject Territorial Development < Transport/Logistics

Abstract

This paper attempts to elucidate some of the complex relationships between market borrowings by developing countries, their reserves strategies, and the costs of borrowings. It is concerned with the observed behavior of financial markets. The paper analyzes motives for holding reserves. It distinguishes conceptually between "earned" and "borrowed" reserves. An hypothesis is advanced that there is a non-linear relationship between reserves accumulated principally through market borrowings and the costs of borrowings as reflected in spreads. The evidence, based on the experience of selected developing countries--Argentina, Brazil, India, Korea, Peru, and the Philippines--is suggestive but definitely not conclusive. This paper focuses on one specific issue--that is, increases in reserves which result principally from expanded market borrowings and borrowing costs.