1. Suppose that during the year, the won rose by 8% against the dollar and the Bank of Korea kept 100% of its reserves in dollars. At a current exchange rate of W1,011/$, what would that do to the won cost of maintaining reserves of $205.5 billion?
2. What are some pros and cons of the Bank of Korea diversifying its investment holdings out of dollars and into other currencies, such as euros and yen?
3. How has the almost universal central bank preference for investing reserve assets in U.S. Treasury bonds affected the cost of financing the U.S. budget deficit?