Foreign Currency Deposits and International Liquidity Shortages in Pakistan

WPIEA1672004 Image
Price:  $15.00

Author/Editor: Abbas Mirakhor, Iqbal Mehdi Zaidi
Release Date: © September, 2004
ISBN : 978-1-45185-821-1
Stock #: WPIEA1672004
Stock Status: On back-order

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This paper studies the implications of foreign currency deposits (FCDs) for international liquidity shortages in Pakistan. The analysis focuses on how the large volume of FCDs and the specific institutional characteristics of those deposits have made the Pakistan economy highly vulnerable to exogenous shocks. The analysis shows that FCDs created another channel for government borrowing, and fiscal sustainability in a "closed" system may be very different from sustainability in a more "open" system. There is a need to think of these issues in terms of total balance sheet vulnerability, and we recommend measures that would make domestic-currency-denominated assets attractive to investors.


Economic policy , International financial system , International liquidity , Monetary policy

More publications in this series: Working Papers

More publications by: Abbas Mirakhor ; Iqbal Mehdi Zaidi