Abstract:

The purpose of this study is to identify and evaluate the major motives driving countries to shift substantial portions of their international reserves into Sovereign Wealth Funds.
First, historical and contemporary macroeconomic theoretical approaches with respect to international reserves are compared. Next, a theoretical foundation describing global trends in terms of accumulating, sustaining, and managing international reserves is developed. Based on previous studies, major economic and political influencers that impel key shifts in the perception of the importance, size, structure, and objectives of developing and maintaining international reserves are underscored.
Simultaneously, this study contrasts the international reserve’s theoretical basis with its ongoing practice, as carried out by both developed and developing countries.