Due to buoyant capital inflows East Asian central banks with exchange rate targets accumulate foreign reserves and thereby increase surplus liquidity. East Asian central banks with more flexible exchange rate regimes also face surplus liquidity that mainly emanates from past accumulation of...

The paper investigates the impact of exchange rate volatility on growth in Emerging Europe and East Asia. Exchange stability has been argued to affect growth negatively as it deprives countries from the ability to react in a flexible way to asymmetric real shocks and may enhance the probability...

Both before and after the Asian crisis, the dollar has been the dominant anchor and reserve currency in East Asia. Due to underdeveloped capital markets and the limited international role of their domestic currencies, the East Asian countries (except Japan) are likely to continue to stabilize...