Guidotti–Greenspan rule

The Guidotti–Greenspan rule states that a country's reserves should equal short-term external debt (one-year or less maturity), implying a ratio of reserves-to-short term debt of 1.[1][2][3] The rationale is that countries should have enough reserves to resist a massive withdrawal of short term foreign capital.

The rule is named after Pablo Guidotti – Argentine former deputy minister of finance – and Alan Greenspan – former chairman of the Federal Reserve Board of the United States. Guidotti first stated the rule in a G-33 seminar in 1999, while Greenspan widely publicized it in a speech at the World Bank.[4] In subsequent research Guzman Calafell and Padilla del Bosque found that the ratio of reserves to external debt is a relevant predictor of an external crisis.[5]


  1. ^ "Capital flows from the South to the North: a new dynamic in global economic relations" (PDF). South Centre. August 2008. Retrieved 2009-12-01.
  2. ^ Green, Russell; Tom Torgerson (March 2007). "Are High Foreign Exchange Reserves in Emerging Markets a Blessing or a Burden?" (PDF). United States Department of the Treasury. Retrieved 2009-12-01.
  3. ^ Jeanne, Olivier; Romain Rancière (October 2006). "The Optimal Level of International Reserves for Emerging Market Economies: Formulas and Applications" (PDF). International Monetary Fund. Retrieved 2009-12-01.
  4. ^ Greenspan, Alan (April 29, 1999). "Currency reserves and debt". Federal Reserve System. Retrieved 2009-12-01.
  5. ^ Calafell, Javier; Rodolfo Padilla del Bosque (2002). "The Ratio of International Reserves to Short-Term External Debt as Indicator of External Vulnerability: Some Lessons From the Experience of Mexico and Other Emerging Economies" (PDF). Retrieved 2015-05-05.

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