Emerging economies with inflation targets (IT) face a dilemma between fulfilling the theoretical conditions of "strict IT", which imply a fully flexible exchange rate, or applying a "flexible IT", which entails a de facto managed floating exchange rate with FX interventions to moderate exchange...

In this article, we explore the demand for the euro for risk management purposes, and the evidence of stock market integration in the euro area. We define a reserve currency as one that investors demand either because it helps them hedge real interest risk and inflation risk, or because it helps...

This paper analyzes the Spanish monetary system from 1856, when the Bank of Spain was created, to 1874, when it was awarded the monopoly of emission. This period was characterized by the emergence of an unregulated banking system, with multiple banks of issue entitled to emit bank notes. We...

This paper explores the role of international reserves as a stabilizer of international capital flows during periods of global financial stress. In contrast with previous contributions, aimed at explaining net capital flows, we focus on the behavior of gross capital flows. We analyze an...

This paper looks at whether the tendency of some governments to borrow short term is reinforced by financial support from the International Monetary Fund. I first present a model of sovereign debt issuance at various maturities featuring endogenous liquidity crises and maturity mismatches due to...

Using empirical analysis, complemented with case studies, this paper studies under which circumstances IMF programs manage to catalyze private capital flows into the countries concerned. While we found no catalysis in general, the situation differs very much depending on the type of capital flow...

This paper has been prepared to mark the tenth anniversary of Economic and Monetary Union (EMU). It seeks to give an overview of the Spanish economy’s experience in this new institutional setting. It should be viewed as the result of a joint effort by a sizeable group of researchers from the...

This paper proposes updating and improving the IMF’s lending mechanism, by replacing all of its credit lines with a single financial facility. Under this single facility, costs would rise with the volume drawn down and the time elapsed. At the same time, arrangement and repayment periods would...