A contribution to the debate on international reserves published by Macro Vision (11/2018).
“International reserves serve as insurance in periods of stress and help reduce country risk in periods of stability. However, keeping reserves entails costs, so there is a debate about the appropriate level of reserves for each country.
Brazil holds a comfortable reserves position – enough to satisfy the main criteria used to determine optimal reserves levels.
A lot has been said about the high cost of carrying reserves, but they are a profitable asset over time. According to our estimates, since 2007, maintaining reserves has produced a positive financial result for Brazil when FX depreciation is considered…”