An advantage of international reserves is that they allow countries to sustain temporary balance-of-payments deficits until acceptable adjustment measures can operate to correct the disequilibrium.

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International reserves can be used to cover temporary balance-of-payments deficits, which may arise due to various factors such as unfavorable terms of trade, unexpected changes in economic policies, or sudden external shocks. By using their reserves, countries can avoid disruptive adjustments that could cause social and economic hardship, such as sharp currency depreciation, higher inflation, or lower consumption and investment. Instead, they can buy time to implement more gradual and less painful measures, such as exchange rate flexibility, tighter fiscal or monetary policies, or structural reforms. However, this advantage of reserves depends on their availability, adequacy, and sustainability, as well as on the effectiveness of the adjustment policies that eventually address the underlying causes of the imbalance.

An Advantage of International Reserves Is That They Allow Countries