The growing importance of foreign currency deposits (FCDs) in some developing countries has raised numerous issues, particularly regarding the effectiveness of economic policies. This paper discusses factors that influence the emergence of FCDs and their impact on key macroeconomic relations. It...

This paper describes and analyzes forward market systems with varying degrees of sophistication, and it assesses them from the viewpoint of a smaller industrial or developing country asking itself how it could institute such a system, or how it could further develop an existing system in a way...

The paper reviews recent theoretical and empirical developments in the analysis of informal currency markets in developing countries. The basic characteristics of these markets are highlighted, and alternative analytical models to explain them are discussed. The implications for exchange rate...

The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and...

This paper reviews developments and issues in the exchange arrangements and currency convertibility of IMF members. Against the backdrop of continuing financial globalization and a series of emerging market crises since 1997, there have been important changes in the evolution of exchange rate...

This paper outlines legal developments related to floating currencies, gold, and special drawing rights (SDRs) in the IMF. The Articles of the Fund require each member to establish a par value for its currency in terms of gold as a common denominator. Alternatively, the par value may be...

This paper investigates the impact of long-run terms-of-trade shocks. Analytically, we show that, if capital goods are largely importable or the labor supply is sufficiently elastic, then natural-resource booms increase aggregate investment and worsen the current account, but Dutch ‘Disease’...