Central Bank Intervention

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Are Capital Controls and Central Bank Intervention Effective?

Capital controls and intervention in the foreign exchange market are two controversial policy options that many countries have adopted in the past in order to influence the exchange rate and moderate capital flows. Colombia has a long record in the use of these policies with mixed results and...

Estimating the COP Exchange Rate Volatility Smile and the Market Effect of Central Bank Interventions: A CHARN Approach

 

Identifying the Effects of Simultaneous Monetary Policy Shocks. Fear of Floating under Inflation targeting

Many central banks, particularly in the developing world, aim for exchange rate stability as a macroeconomic goal. However, most are reluctant to relinquish monetary policy autonomy, so they end up operating through both interest rate and foreign exchange interventions. But the use of multiple...

Simultaneous Monetary Policies in the Context of the Trilemma: Evidence from the Central Bank of Turkey

Many central banks that have opted for monetary autonomy have also been reluctant to relinquish control over the value of their currencies. As a result, they have operated through both interest rate and foreign exchange interventions.  However, in the context of the monetary trilemma, both...

The effects of intraday foreign exchange market operations in Latin America: results for Chile, Colombia, Mexico and Peru

This paper analyses the effects of sterilised, intraday foreign exchange market operations (non-discretionary and discretionary) on foreign exchange returns and volatility in four inflation targeting economies in Latin America. The distribution of exchange rates during intervention and non-...

The Impact of Pre-announced Day-to-day Interventions on the Colombian Exchange Rate

The adoption of a managed regime assumes that interventions are relatively successful. However, while some authors consider that foreign exchange interventions are ineffective, arguing that domestic and foreign assets are close substitutes, others advocate their use and maintain that their...

When Multiple Objectives Meet Multiple Instruments: Identifying Simultaneous Monetary Shocks

Central banks generally target multiple objectives while having at least the same number of monetary instruments. However, some instruments can be inadvertently collinear, leading to indeterminacy and identification failures. Paradoxically, most empirical studies have shied away from this...

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