In particular, reserves should be managed along with liabilities--and other assets-to minimise the vulnerability of emerging market economies to a variety of shocks. In this context 3  BIS Review 47/1999  some simple principles can be outlined that are likely to be useful guidelines for policymakers. It may also be useful to consider somewhat more nuanced approaches to this problem.
Considerable progress has been made in recent years in developing sophisticated financial instruments. These developments create added complexity that all financial market participants, including policymakers from emerging market economies, must manage. However, they also create opportunities that emerging market economies should seek to exploit. In doing so there are lessons they can learn from advances in risk management strategies developed by major financial institutions.