Central Bank Views on Foreign Exchange Intervention

Abstract

This note reviews central banks’ views on the objectives, methods and effectiveness of foreign exchange intervention, according to their responses to a survey questionnaire. Due to the recent global financial crisis, objectives have shifted to focus more on curbing capital flows and exchange rate volatility. Central banks prefer less transparent intervention practices, which they time by monitoring the most liquid segments of the market. Interventions are often perceived as being successful in achieving the desired objective. Combining intervention with macroprudential and capital control measures may have contributed to recent successes. Besides analysing these and more findings of this year’s meeting, this paper compares them to the results of the last survey from 2004.Full publication: Market Volatility and Foreign Exchange Intervention in EMEs: What Has Changed?

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