Countries accumulate foreign currency reserves for all of the following reasons, EXCEPT:
A) to achieve a higher backing ratio.
B) to safeguard against future shortfalls in foreign capital.
C) to safeguard against a domestic banking crisis.
D) to improve the stature of the country in the WTO.

Question

Quizplus · Accepted Answer

Countries accumulate foreign currency reserves to achieve a higher backing ratio, safeguard against future shortfalls in foreign capital and provide a cushion against a domestic banking crisis. However, accumulating foreign currency reserves does not directly improve the stature of a country in the World Trade Organization (WTO).

Countries Accumulate Foreign Currency Reserves for All of the Following