Reserves enable the monetary authorities to intervene in foreign exchange markets to affect the exchange value of their domestic currency in the market. Reserves are invested in low-risk and liquid assets, often in foreign government securities. The purchase by one country s private citizens or their agents of marketable non-controlling positions in equity and debt securities issued by another country s private citizens, corporations, banks and government. Commonly, these marketable non-controlling positions can be easily reversed. Portfolio investors do not control or manage the companies in which they invest, but rather provide capital in exchange for dividends, interest and the hope that share prices will increase.
Portfolio investment is more speculative than direct investment.
Since 1962, these arrangements have been renewed every four to five years, and have been invoked 10 times according to IMF documents. A system of monetary organization whereby the value of a country s currency is legally defined and tied to a fixed quantity of gold. Since 1976, G-7 heads of state have met annually to discuss and coordinate economic policy. The international market for financial capital in the form of loans, deposits, financial investments, etc. The term relates essentially to commercial transactions.