Economics · Foreign Exchange Reserves
The Guidotti-Greenspan-IMF rule entails:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1adequacy of foreign exchange reserves in terms of both short term external debt and a measure of the scope for capital flight (part of M2) modified by a 'probability factor' captured by a country risk index
- 2adequacy of foreign exchange reserves in terms of the import cover of three to four months' of a country's imports
- 3countries to hold 'liquid reserves' equal to their short-term foreign liabilities (maturing within 6 months)
- 4countries to hold 'liquid reserves' equal to their short-term foreign liabilities (maturing within a year)✓
Correct answer
countries to hold 'liquid reserves' equal to their short-term foreign liabilities (maturing within a year)
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