Reserve Assets Research Articles

Features and Factors of the Implementation of the Function of World Money by Reserve Assets in the Modern GMFS

Features and Factors of the Implementation of the Function of World Money by Reserve Assets in the Modern GMFS

Are stablecoins the money market mutual funds of the future?

This paper is the first to provide a comprehensive comparison of two financial instruments: stablecoins and money market mutual funds (MMFs). We observe similar reserve asset backing for fiat reserve backed (FRB) stablecoins and MMFs, similar importance of sponsor support, and the same negative association between macroeconomic indicators and peg deviations. Both instruments serve as short-term facilities for investors to park funds and their primary market microstructure is similar. However, FRB stablecoins exhibit larger dispersions from the dollar peg, significantly higher volatility, and a lack of transparency in their market infrastructure. Larger FRB stablecoins show reduced volatility compared to their smaller counterparts, with peg deviation drivers more closely resembling those of MMFs. We conclude that FRB stablecoins demonstrate remarkable similarities to MMFs and have the potential to become the MMFs of the future.

Pretpostavke za povećanje osnovnog kapitala iz neto imovine (pretvaranjem neraspoređene dobiti ili rezervi u osnovni kapital) društva s ograničenom odgovornošću

The increase in the share capital from the funds of the limited liability company represents a nominal increase in the share capital, which is carried out by converting retained profit or dedicated reserves into share capital. The main economic purpose of increasing the basic capital from the company’s assets is to strengthen the company’s creditworthiness, which is achieved by fully or partially tying free accounting assets (retained profit or reserves) to the share capital. Before implementing this method of increasing the share capital, it is necessary to fulfil certain legal and accounting assumptions. The focus of the analysis in this paper refers to the fulfilment of the legal and accounting assumptions for converting retained profit and reserves into share capital and the limitations for implementing this way of increasing the share capital of a limited liability company. In addition to the above, we single out as particularly important considerations related to reserve assets, in relation to which there is a very modest regulation in the Serbian Law on Business Companies.

COMPARATIVE ANALYSIS OF FX AND GOLD RESERVES AMONG MAJOR ECONOMIES: A STUDY FROM Q1 2020 TO Q1 2024

In order to identify fluctuations, management approaches, correlations, and trends, this research examines the foreign currency (FX) and gold reserves of China, Japan, Switzerland, the United States, and India from Q1 2020 to Q1 2024. We found notable fluctuations in Switzerland's foreign exchange reserves via analysis of quarterly data, whereas the United States gold holdings remained steady. We discovered significant variations in resource management techniques using descriptive statistics and ANOVA. We also observed high cross-national correlations, indicating common impacts and interrelated economic policies. The results show that whereas China's changing gold holdings show a more flexible response to changes in the economy, the USA and Switzerland maintain steady gold reserves, indicating cautious financial tactics. According to the report, nations with high levels of volatility should diversify their reserve assets, adopt cautious approaches, improve international economic coordination, evaluate policies on a regular basis, and use predictive analytics to foresee changes in the economy. This research highlights the necessity for flexible and coordinated policies to sustain economic stability in a globally linked financial system. Overall, it offers insightful information on the reserve management procedures of major countries. By maximizing reserve management, policymakers may reduce risks and seize opportunities in a changing economic landscape. This is the goal of the proposals made here.

Application of TOPSIS Method in Evaluating the Performance of Insurance Companies: A Case Study

Insurance is a method for managing risk, as it protects against unforeseen financial losses. When you purchase insurance, you are safeguarding yourself against possible mishaps by having an insurance company compensate you or someone you designate. If you experience an accident and are uninsured, you may be responsible for all related expenses. Having appropriate insurance can help mitigate the various risks you might encounter throughout your life. Insurance not only covers unexpected incidents but also assists in paying for routine expenses such as annual medical checkups and dental visits. Furthermore, insurance companies negotiate discounts with healthcare providers, allowing their customers to pay the reduced rates. An insurance policy has two parties: the policyholder, who is the individual or company receiving the policy, and the insurer, who is the insurance company. The policyholder need not be the insured party. A person or business can become a policyholder by purchasing an insurance policy that protects another person or company. For instance, if a company buys life insurance for an employee, the employee is the insured party, and the company is the policyholder. Accounting, auditing, and actuarial standards must be carefully applied when examining insurance businesses' financial and other reports. Finding the business risks that insurance companies must deal with requires the use of financial information in particular. The management of insurance companies' technical reserves and guarantee reserve assets is crucial for reducing these risks. According to professional organizations and nations with free market economies, the main goal of financial statements in this situation is to give potential consumers the knowledge they need to make wise decisions. The economy depends on measuring the performance of insurance businesses. However, reliable performance evaluation can be difficult due to the unpredictability and complexity of the global market as well as the growing information flow. In certain situations, traditional performance measurement techniques might not produce appropriate findings. The fuzzy multi-criteria technique has been successfully used to address this issue.Critical proportional assessment is a multi-criteria decision-making analytical tool that aids in problem-solving. The COPRAS system has been developed as a tool for decision-making under specific contexts. This method calculates both the increase and decrease of criteria and improves the quality and quantity of criteria calculation. Compared to other methods, the COPRAS system can handle many criteria and offers a higher level of benefit and usage. Alternative taken as Equity and reserves, Business assets, Provision and liabilities, financial incomes, Cost of insurance, Cost of insurance. Evaluation preference taken as Life Insurance Corporation of India, HDFC Life Insurance Co. Ltd, Max Life Insurance Co. Ltd, ICICI Prudential Life Insurance Co. Ltd, Kotak Mahindra Life Insurance Co. Ltd, Aditya Birla SunLife Insurance Co. Ltd, TATA AIA Life Insurance Co. Ltd, SBI Life Insurance Co. Ltd, Bajaj Allianz Life Insurance Co. Ltd, PNB MetLife India Insurance Co. Ltd. From the result it is seen that SBI Life Insurance Co. Ltd is got the first rank where as is the Bajaj Allianz Life Insurance Co. Ltd is having the lowest rank.

Ecological money and finance—upscaling local complementary currencies

This paper puts forth a new pathway to sustainable policy to upscale the transformative power of local complementary currencies. It first reviews the mechanisms by which complementary currencies re-embed monetary circulation within sustainability and biomimetic resilience criteria. It then puts forth a prototype policy pathway whereby private banks swap SDG impact certificates of their complementary currency loans against new reserve assets held at the Central Bank. It finally provides analytical insight on this prototype policy with a a new PK-SFC model comprising 106 accounting and behavioral equations. Simulations show that the prototype policy generates short-lived economic expansion, increases banking stability, and induces structural change through increased systemic capacity for evolution, resilience, and fitness for evolution. We finally discuss the practical implications of our results for sustainability policies.

Big money reigns, small money gains - but who will fix the International Monetary System?

Soumission à Epi-revel The evolution of the international monetary system towards a more multipolar configuration is not only reflective of fundamentals but of increasing fragilities and uncertainty. In this paper, we map the trajectories of the big four (EUR, GBP, JPY, USD) and secondary currencies (AUD, CAD, CHF, CNY) in the past decade and argue that the system is increasingly illadapted to thereconfiguration of the globaleconomy, bringing to theforefront the need, in particular, for a reliable alternative international reserve asset. International audience New International Challenges, Interdisciplinary Thematic PhD Days of Post- Graduate School DESPEG, Université Côte d’Azur, 2023

What Determines Egypt’s Demand for Foreign Reserves?

Objective: The main objective of this paper is to identify the determinants of the demand for foreign reserves in Egypt. Methods: The buffer stock model, quarter-century data spanning over the past 20 years, and Auto-Regressive Distributed Lag (ARDL) regression are all employed to estimate Egypt's demand function for foreign reserves, assess its stability, and predict how swiftly it may change if the underlying Cointegrated connection is disturbed. Results: The results reveal that exports and imports have elasticities of demand for foreign reserves of 1.16 and -3.69, respectively. Moreover, Egypt's foreign reserve assets have notably increased due to foreign direct investment and foreign portfolio investment growth. Lastly, the demand function for foreign reserves is steady, and in the event of a shock, it returns to its steady state in less than two years. Conclusion: To improve Egypt's foreign reserve holdings, policymakers should concentrate on measures encouraging exports and attracting foreign investment.

Reserve Asset Competition and the Global Fiscal Cycle

Reserve Asset Competition and the Global Fiscal Cycle

THE GEOLOGICAL-GEOMORPHOLOGICAL CONDITIONS OF WATER SPRINGS FORMATION, THEIR CADASTRE, AND PROSPECTS FOR THEIR CONSERVATION IN THE VOLYN REGION

The presented research aims to explore the potential for preserving and conservation water springs in the Volyn region. The scientific novelty of this study lies in the comprehensive approach developed by the author, encompassing various measures to protect, conserve, and pass down these vital water springs in the Volyn region. The research methods employed include both general scientific approaches and specialized scientific techniques, such as analysis, synthesis, synergistic analysis, data collection through field surveys and descriptions, content analysis, cartography, and physical-geographical zoning. The analysis of existing scientific literature has enabled the formulation of a comprehensive interpretation of the term «water spring» as a landscape component resulting from the intricate interplay of various factors, including hydrological, geomorphological, geological, climatic, and sometimes anthropogenic elements. This interplay shapes the state of surface waters and maintains a close relationship with the hydrogeological environment. The examination of regulatory documents from Ukraine, Poland, the Czech Republic, and Kazakhstan has revealed some ambiguity concerning the classification of water sources as either surface or underground waters. However, the methods employed to determine water quality and discharge often overlap with those used for surface water bodies. The geological, hydrogeological, hydrological, and meteorological conditions of the Volyn region significantly contribute to the formation of water springs, which are most commonly found in river valleys, streams, and ravines. A substantial portion of these springs are associated with fissure-type waters, originating within karst massifs featuring underground voids interconnected through a network of cracks. Field research conducted by the authors, coupled with information from the Regional Office of Water Resources in the Volyn region, has identified approximately 90 natural water sources within the study area. The majority of these sources are concentrated within the Volyn Polissia boundaries, particularly within the Upper Pripyat and Liuboml-Kovel physiographic districts. Of special significance among these water sources are the sacred or hallowed ones, which fulfill not only a natural role but also serve a social function by meeting the spiritual needs of local residents and pilgrims. An analysis of the Volyn region's natural reserve assets confirms that natural water sources enjoy protection within 22 different objects and territories, including sanctuaries (hydrological, general zoological, and landscape), hydrological nature monuments, a protected tract, and a park-monument of horticultural art. Most frequently, these water bodies are safeguarded as natural hydrological monuments. The paper advocates for the inclusion of landscape-sacred monuments as a distinct category within the legal framework, ensuring the preservation not only of the sacred source itself but also its surrounding environment or landscape. Several water sources in the studied region, particularly the sacred ones, are located in proximity to other objects and territories of the Natural Reserve Fund (NRF). Given their combined natural and social significance, there is a pressing need to incorporate such sources into the existing nature conservation areas within the region. The article delineates key measures for safeguarding, conserving, and passing down water sources in the Volyn region. These measures encompass certification and continuous monitoring of water sources, the adoption of practices that include water sources in the natural reserve fund to expand it, integration into regional and local ecological networks, active involvement in environmental education initiatives, and the dissemination of information about water sources through various means, such as scientific and journalistic publications, including articles, booklets, and brochures. The outcomes of this study, which pertain to enhancing nature protection legislation and expanding the Volyn region's natural reserve fund by incorporating unprotected water springs, can be valuable resources for legislative bodies in Ukraine and local self-government entities within the Volyn region.
 Keywords: water spring, Volyn region, nature reserve fund.

Sustainable future bonds: Boosting multilateral development banks lending and improving the global reserve system

AbstractMultilateral development banks (MDBs) are crucial players to finance a greener, more socially inclusive and sustainable future, given their unique financial model that provides low‐cost and long‐term investments in areas aligned with the Sustainable Development Goals (SDGs) and the Paris Climate commitments. To fulfill their potential, MDBs need a stepwise increase in financing, which has been a challenge given the reluctance of their shareholders to provide additional paid‐in capital. We present a novel proposal for MDB hybrid capital that is designed to boost MDB funding while supplying the international reserve system with a new safe asset, the Sustainable Future Bonds (SFB). Under the SFB proposal, a tiny fraction of the global foreign reserves would be rechanneled to MDBs, and given liquidity enhanced mechanisms, SFB would serve as an additional safe reserve asset for central banks' portfolios. As our conservative estimation shows, by deploying just 0.5 percent of global foreign reserves for the Sustainable Future Bonds, at least $45 billion per year in fresh capital to MDBs would be mobilized. At that pace, by 2030, MDBs will have $360 billion in capital injections, which, depending on their leverage capacity, could result in new lending from $1.6 trillion to $1.9 trillion.

Flight-to-quality—Money market mutual funds and stablecoins during the March 2023 banking crisis

The March 2023 banking crisis prompted a flight-to-quality, with inflows into money market mutual funds and outflows from stablecoins. Similar flows from riskier to safer categories within both asset classes highlight the important role of reserve assets and issuer size.

Co-movement Analysis of Foreign Exchange Reserve Volatility in BRICS Countries

Foreign exchange reserves are an important component of a country's official reserve assets and an important indicator of a country's international liquidity. As representatives of emerging market countries and developing countries, the volatility of the foreign exchange reserves of the BRICS countries is crucial to the world. Studying whether there is volatility of foreign exchange reserves among the five countries is conducive to adjusting the direction of foreign exchange reserve management within the country, better exploring ways to promote the development of the foreign exchange reserve market, and is also of great significance to the future economic cooperation among the five countries. This study uses the correlation coefficient method, Granger causality test and cluster analysis to prove that there is indeed co-movement in the volatility of foreign exchange reserves among the BRICS countries.

Prediction of Au-Polymetallic Deposits Based on Spatial Multi-Layer Information Fusion by Random Forest Model in the Central Kunlun Area of Xinjiang, China

In recent years, there has been a growing emphasis on combining intelligent prospecting algorithms, such as random forest, with extensive geological and mineral data for the purpose of quantitatively predicting exploration geochemistry. This approach holds significant importance for enhancing the accuracy of target delineation. The central Kunlun area in Xinjiang possesses highly favorable ore-forming geological conditions, offering excellent prospects for mineral exploration. However, the depletion of shallow deposits coupled with a decade-long gap in geological exploration have presented increasing challenges in the quest to discover substantial metal resources. Consequently, there is now a severe shortage of reserve assets in the region, prompting an urgent need for the implementation of new theories, methods, and technologies in mineral resource investigation and evaluation efforts. The researchers used geological and regional geochemical data to construct a random forest metallogenic discriminant model for predicting the mineralization of gold polymetallic minerals in the central Kunlun area of Xinjiang and delineating the metallogenic target area. Two different sampling methods were compared to quantitatively predict gold polymetallic mineral resources. The results indicate that the selected training samples offer higher prediction accuracy and reliability by fully capturing the complex information of the original data. The random forest model using select training samples has valuable applications in metallogenic prospect prediction and potential division due to its ability to consider the actual exploration cost and identify small areas with high potential and a high proportion of ore. This study significantly improves prediction accuracy, reduces exploration risk, and expands the use of machine learning algorithms in mathematical geology in the central Kunlun area of Xinjiang.

Advanced Directions for the Financial Sovereignty Formation within the Framework of the Great Eurasian Partnership

The new conditions for the implementation of economic activity at the national and international levels require the accelerated formation of sovereignty in critical areas, one of which is financial. The formation of full-fledged financial sovereignty is relevant for all states of Greater Eurasia, and therefore it is advisable to implement this task through joint and coordinated efforts within the framework of a broad Eurasian partnership.Aim. Find out the most promising areas for the formation of financial sovereignty within the framework of a large Eurasian partnership.Methods. A comprehensive analysis of the causes and conditions for the dependence of national economies on external financial systems, a comparative analysis of the factors of Western components dominance in the global financial architecture.Results. The main directions of the formation of the financial sovereignty for the countries of Greater Eurasia on the basis of increasing the level of independence of national financial systems from the Western infrastructure of the financial sector are identified. The most promising methods for achieving this goal are proposed based on the creation of new types of reserve assets within the framework of a large Eurasian partnership, which are an alternative to debt obligations of the United States and European countries, as well as the formation of an integrated system for financial instruments trading by the countries of Greater Eurasia.Conclusions. The growing economic confront ation between the West and a number of the largest economies of Greater Eurasia is extremely relevant to the problem of the formation of real financial sovereignty, the achievement of which requires new approaches, the creation of a number of specialized institutions and large-scale cooperation between the leading economic centers of the continent in order to deepen the integration of national financial systems and markets.

U.S. Interest Rates and Emerging Market Currencies: Taking Stock 10 Years After the Taper Tantrum

In 2013, a shift in expectations of market participants for the timing of the tapering of the Federal Reserve's asset purchases, and its ramifications for normalization of U.S. monetary policy, led to sharp increases in longer-term U.S. Treasury yields and volatility in broader financial markets. The episode came to be known as the "taper tantrum" because the strong market reaction came in response to Federal Reserve communications that were largely consistent with market analysts' expectations.

UNDER PRESSURE OF DIGITALIZATION AND GEOPOLITICAL CHALLENGES: INTERNATIONALIZATION OF CURRENCIES AND THEIR RESERVE STATUS

Digitalization and geopolitical challenges are increasingly being viewed as preconditions for the transformation of global monetary order towards stronger multipolarity. However, according to traditional approaches, current status quo is more viable because of the technological neutrality of reserve currency status. At the same time, alternative approaches point to technological opportunities for the internationalization of the renminbi, which would heighten the competition between the main currencies and hurt the U.S. dollar. Critical overview of new theoretical approaches indicates that putting retail CBDC at the heart of changes in global monetary order is too categorical. It is likely that digitalization will affect the technology of international transactions and thus enhance competition between leading currencies in how they support payment services for clients. Meanwhile, CBDC design issues and cooperation between central banks in transborder digital payments create new trade-offs that support the more traditional approach on global monetary competition. Recent demand trends of reserve assets also contribute to stronger rigidity of the international currency system.

On the Multi-Polarity and Transformation of the International Payment System

In the modern world economy, a global transformation is taking place, a transition is being made from a unipolar world order to a multipolar one. An analysis of the economic literature indicates the absence of a unified approach to assessing the ongoing changes. The article summarizes the views of experts on this process. The transition to multipolarity, the formation of new centers of power, the hegemon's loss of its position lead to a gradual decrease in the role of the US dollar in the world monetary system as a reserve asset and a means of international settlements. The sanctions imposed on Russia contributed to the development of the process of moving away from the dollar and switching to other currencies in international payments. The authors analyzed the evolution of the de-dollarization process, which has been actively developing in recent years, and the factors influencing it. The article summarizes and analyzes scenarios for creating an international payment and settlement unit.

Risk preferences, global market conditions and foreign debt: Is there any role for the currency composition of FX reserves?

I estimate a transition probability matrix associated with a two-state Markov process of emerging market economies (EMEs) volatility. The different states of EMEs volatility, generate switches in central bank preferences between approximated constant relative risk aversion and increasing relative risk aversion expected utility. Therefore, I construct and propose constrained portfolio selection frameworks with skewness, for the currency composition of FX reserves over different EMEs volatility states for Brazil, Indonesia and South Africa. These EMEs have constituted as part of the “Fragile Five”. Thus, I propose progressive risk management procedures for these EMEs. These portfolio selection frameworks satisfy Pratt–Arrow measures of risk aversion and are constrained by each country’s currency composition of foreign debt. Using different methods of computing expected FX reserves returns, traditional strategic FX reserve assets and different maturity structures, I simulate optimal FX reserve weights for each EME and validate my proposal.

International reserve assets diversification using the euro as one of the "poles" in the polycentric model of the global monetary and financial system

The article deals with the structure and direction of foreign reserve assets diversification using the euro as one of the "poles" in the polycentric model of the global monetary and financial system under contemporary geopolitical conditions. Diversification of international reserve assets is an important part of financial and economic policy, it allows to reduce the risks associated with reserves and manage volatility, including that of the financial market and foreign exchange as a financial sector, since the information about the international reserves composition influences the economic agents, operating in the financial market. The author dwells upon various approaches to the diversification of reserves depending on short-, medium-, and long-term goals, passive diversification and stabilizing one. The analyzing of the SDR currency basket and using various currencies in over-the-counter has been carried out. As research methods, the author uses general scientific methods of cognition, such as analysis, synthesis, comparison, graphical interpretation, and analysis of statistical information and time series. The novelty of the article lies in the development of proposals for the diversification of international reserve assets aimed at transforming the global monetary and financial system towards polycentrism and reducing the imbalance of power between Russia and the European Union. It is advisable to take into account the results of the study when implementing financial and economic policies both at the state and corporate levels.