蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Central Banks as Dollar Lenders of Last Resort: Implications for Regulation and Reserve Holdings
蝌蚪网 Journal: Macroeconomics
(pp. 1–41)
Abstract
We explore how foreign central banks behave when firms engage in currency mismatch, borrowing heavily in dollars. A central bank can deal with risky private-sector mismatch in two ways: (i) with financial regulation or (ii) by accumulating reserves to better serve as a dollar lender of last resort. We highlight a novel externality:Individual central banks may over accumulate dollar reserves, as this exacerbates a global scarcity of dollar-denominated assets, lowering dollar interest rates and encouraging firms to further increase their currency mismatch. Relative to the decentralized outcome, a global planner may prefer tighter financial regulation and reduced holdings of dollar reserves.Citation
Das, Mitali, Gita Gopinath, Helene Hall, Taehoon Kim, and Jeremy C. Stein. 2026. "Central Banks as Dollar Lenders of Last Resort: Implications for Regulation and Reserve Holdings." 蝌蚪网 Journal: Macroeconomics 18 (3): 1–41. DOI: 10.1257/mac.20240107Additional Materials
JEL Classification
- E43 Interest Rates: Determination, Term Structure, and Effects
- E44 Financial Markets and the Macroeconomy
- E58 Central Banks and Their Policies
- F31 Foreign Exchange
- F41 Open Economy Macroeconomics
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation