Self-Financing Development

Developing countries have been accumulating foreign-exchange reserves at an unprecedented pace in recent years, with their total volume now totaling roughly $5 trillion. If developing countries were to use a small portion of this wealth to increase financing for regional and sub-regional development banks, they could more easily meet their infrastructure investment needs.

NEW YORK – A remarkable feature of the international financial system in the last decade has been the rapid and vast accumulation of foreign-exchange reserves by developing countries. World foreign reserves tripled from $2.1 trillion in December 2001 to an unprecedented $6.5 trillion in early 2008, according to IMF data.