22 C E N T E R F O R WO M E N ' S G LO B A L L E A D E R S H I P institution, fail to address core human rights obligations is rarely considered. However, there is no reason why central banks should not be held accountable to the same human rights principles as other government agencies. Foreign Exchange Reserves To shield themselves against global shocks, many central banks in low-income countries hold reserves of foreign currency—which are called foreign exchange reserves. Foreign exchange reserves are typically denominated in a major international currency, such as the dollar or Euro. In recent decades, the rapid mobility of finance across international borders has increased the risks of financial crises. Short-term inflows of capital—to buy stocks, bonds, and other financial products—can quickly reverse themselves, putting pressure on a country’s currency, its financial sector, and the domestic economy. In the event of this kind of rapid outflow of capital, a country can draw on its foreign reserves in order to protect its currency and to provide some insulation against the negative consequences of such a crisis. Many countries began to accumulate large stocks of foreign exchange after the East Asian financial crisis in 1997. In many respects, these large stocks of foreign exchange reserves represent idle resources. There are real costs associated with diverting resources towards the accumulation of foreign exchange reserves, instead of being used to finance development.25 From a human rights perspective, the accumulation of reserves could be justified in terms of insuring against a financial crisis which could lead to budget cuts that affect economic and social rights. However, it is important to question whether such safeguards could be secured in other ways, in which case idle reserves could be mobilized for the realization of rights, i.e., they would contribute to the maximum available resources. Explicit restrictions on shortterm capital inflows and outflows, often called capital controls, represent one alternative to the accumulation of foreign reserves. By limiting the free movement of capital, particularly financial flows that are speculative in character, countries can open up space to pursue policies that facilitate the realization of basic rights. Regulation of Financial Sector Central banks can have a key regulatory role with respect to the financial sector, setting out the rules and incentives and determining how the financial sector channels and allocates its resources. By changing these rules, central banks in countries around the world can help mobilize financial resources and channel them to uses which support the realization of rights. For example, central banks could strengthen the regulator requirements on commercial banks which fail to extend a certain amount of credit to priority areas, for instance, housing, jobcreating investments, or small-scale loans to the informal self-employed. Positive incentives could also be put in place. If banks are not lending because of perceived risk, government guarantees could be extended on ESR-priority areas. Public