International reserves and foreign exchange

International reserves are an instrument of great importance for macroeconomic policy. In particular, they have a close relationship with the exchange rate policy, because the operations of purchase and sale of currencies, making the central bank can affect the conditions of the foreign exchange market. Where the central bank can become a supplier or important plaintiff in that market, interventions by the central bank could influence the exchange rate.

In general, the need to maintain international reserves is greater for economies that adopt a regime of fixed exchange rate than for those who prefer a floating exchange rate regime. Under a fixed exchange rate regime, is needed high international reserves since in this regime, the central bank sets a value for the exchange rate and intervenes in the market by buying or selling foreign exchange to keep it constant, On the other hand, under a regime of floating exchange rate, international reserves may be lower because these are occasionally used to facilitate the orderly adjustment of the foreign exchange market, since in this case, the value of the exchange rate is determined by the free supply and demand.

In its natural and obvious sense, concentrate is gather at a single centre or point that is separated or together under a single domain ownership of various parts. At the same time, centralized means meet several things in a common center or, in other words, do that many things depend on a power.
In a regime of freedom will change, all residents of a country can own and freely negotiate gold and international changes, without any obligation whatsoever to sell to anyone; but in order to concentrate the gold and foreign exchange in the central bank, the legal system has tools that allow you to buy them, without having to force bondholders to make it.

In a regime of exchange control, residents of a country can not own or trade gold or foreign exchange and in order to fully concentrate these reserves in the central bank, the legal system imposes on them the obligation to sell them, under penalty of incurring the sanctions referred to in the same legislator. The concentration of reserves in central banks and the administration thereof in charge, has had different significance according to the bases of functioning of the monetary system.

1. What is the economic recession?
2. Additional earnings in the Internet
3. Refinancing Loans for Small Business
4. Bank credit and installment What’s the difference
5. Transactions with securities as a form of financial intermediation service
6. Where you buy and sell debt titles
7. Several recommendations on how to profitably sell an apartment