• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms. Fiona Chu
    • Abstracting/ Indexing:  CNKI, Google Scholar, Electronic Journals Library, Crossref, Ulrich's Periodicals Directory, MESLibrary, etc.
    • E-mail: joebm.editor@gmail.com
JOEBM 2016 Vol.4(1): 29-35 ISSN: 2301-3567
DOI: 10.7763/JOEBM.2016.V4.362

Foreign Exchange Interventions as an Unconventional Monetary Policy Instrument — An Empirical Review

Bogdan Badescu

Abstract— The crisis showed the assumption that keeping inflation under control is a sufficient condition to ensure a stable economy is not valid anymore. As economies are more and more interconnected and the flow of capital is free, foreign exchange interventions become a tool used by many economies in order to protect against unfavourable fluctuations in the exchange rate. Empirical research has shown that it cannot be provided a recipe that guarantees the success of such operations and that a successful stance cannot be maintained for a long period of time, because the necessary adjustments will be inevitable. Also, maintaining foreign exchange reserves and intervening on the market involves costs. Overall, foreign exchange interventions remain a research topic of interest, because the exchange rate fluctuations affect the balance sheets of banks, companies and, increasingly, even households.

Index Terms— FX intervention, exchange rate, monetary policy, sterilization.

Bogdan Badescu is with the Bucharest University of Economic Studies, Bucharest, Romania (e-mail: bogdanbadescu82@yahoo.ro).


Cite: Bogdan Badescu, " Foreign Exchange Interventions as an Unconventional Monetary Policy Instrument — An Empirical Review," Journal of Economics, Business and Management vol. 4, no. 1, pp. 29-35, 2016.

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