3  BIS Review 113/2000  As I already mentioned, there has been a solid response on the part of countries concerning the two underlying factors of financial strength: macroeconomic stability and domestic reforms of prudential regulation and supervision. You will find a very receptive ear to ideas to further strengthen the countries’ financial systems.
But we need to recognize that domestic protection is limited and costly. For example, countries in Latin America hold huge amounts of international reserves with a significant carrying cost at current rates and no clear stabilizing effect. In fact, there is the fear that the very use of the reserves may signal weakness and prompt an attack.