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Epilogue: foreign-exchange-market operations in the twenty-first century

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  • Michael D. Bordo
  • Owen F. Humpage
  • Anna J. Schwartz

Abstract

Foreign-exchange operations did not end after the United States stopped its activist approach to intervention. Japan persisted in such operations, but avoided overt confl ict with its monetary policy. With the onset of the Great Recession, Switzerland has transacted in foreign exchange both for monetary and exchange rate purposes, and key central banks have used swap facilities to extended their lender-of-last-resort functions. Developing and emerging-market economies continue to intervene, but their actions may hamper the development of their own foreign-exchange markets. China’s undervalued exchange rate is producing inflation and real appreciation, despite China’s efforts to sterilize its reserve accumulation.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 1207.

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Date of creation: 2012
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Handle: RePEc:fip:fedcwp:1207

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Keywords: Foreign exchange market ; Financial markets ; International finance;

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  1. Owen F. Humpage & Javiera Ragnartz, 2005. "Swedish intervention and the Krona float, 1993–2002," Working Paper 0514, Federal Reserve Bank of Cleveland.
  2. Michael D Bordo & Owen F Humpage & Anna J Schwartz, 2011. "The Federal Reserve as an informed foreign-exchange trader: 1973-1995," Working Paper 1118, Federal Reserve Bank of Cleveland.
  3. Joshua Aizenman & Yothin Jinjarak & Donghyun Park, 2010. "International reserves and swap lines: substitutes or complements?," NBER Working Papers 15804, National Bureau of Economic Research, Inc.
  4. Christopher J. Neely, 2011. "A foreign exchange intervention in an era of restraint," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 303-324.
  5. Takatoshi Ito & Tomoyoshi Yabu, 2004. "What Prompts Japan to Intervene in the Forex Market? A New Approach to a Reaction Function," NBER Working Papers 10456, National Bureau of Economic Research, Inc.
  6. Alice Y. Ouyang & Ramkishen S. Rajan & Thomas D. Willett, 2007. "China as a Reserve Sink: The Evidence from Offset and Sterilization Coefficients," Working Papers 102007, Hong Kong Institute for Monetary Research.
  7. Michael J. Fleming & Nicholas J. Klagge, 2010. "The Federal Reserve's foreign exchange swap lines," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 16(Apr).
  8. Bonser-Neal, Catherine & Roley, V Vance & Sellon, Gordon H, Jr, 1998. "Monetary Policy Actions, Intervention, and Exchange Rates: A Reexamination of the Empirical Relationships Using Federal Funds Rate Target Data," The Journal of Business, University of Chicago Press, vol. 71(2), pages 147-77, April.
  9. Raphael Auer & Sébastien Kraenzlin, 2011. "International liquidity provision during the financial crisis: a view from Switzerland," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 409-418.
  10. Galati, Gabriele & Melick, William & Micu, Marian, 2005. "Foreign exchange market intervention and expectations: The yen/dollar exchange rate," Journal of International Money and Finance, Elsevier, vol. 24(6), pages 982-1011, October.
  11. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fear of Floating," NBER Working Papers 7993, National Bureau of Economic Research, Inc.
  12. Owen F. Humpage, 1996. "U.S. intervention: assessing the probability of success," Working Paper 9608, Federal Reserve Bank of Cleveland.
  13. Rich, Georg, 2000. "Monetary Policy without Central Bank Money: A Swiss Perspective," International Finance, Wiley Blackwell, vol. 3(3), pages 439-69, November.
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Cited by:
  1. Pablo Pincheira, 2013. "Interventions and Inflation Expectations in an Inflation Targeting Economy," Working Papers Central Bank of Chile 693, Central Bank of Chile.
  2. Tervala, Juha, 2014. "China, the Dollar Peg and U.S. Monetary Policy," MPRA Paper 53223, University Library of Munich, Germany.
  3. Jesus Crespo Cuaresma & Mauro Costantini & Jaroslava Hlouskova, 2014. "Can Macroeconomists Get Rich Forecasting Exchange Rates?," Department of Economics Working Papers wuwp176, Vienna University of Economics, Department of Economics.

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