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On the use of sterilisation bonds in emerging Asia

Listed author(s):
  • Mehrotra, Aaron

We document recent developments in the use of sterilisation bonds by six central banks in emerging Asia, and discuss the implications for monetary policy and the financial sector. An important development in the sterilisation of foreign exchange interventions in past years has been the frequent use of central banks' own paper. There has been an attempt to lengthen the maturity structure of sterilisation bills, and maturities have risen, especially in 2010-11. The choice of sterilisation instrument is likely to depend partly on their relative costs. In particular, as the yield on central bank securities has fallen relative to the rate of remuneration of required reserves, some central banks in Asia have increasingly used central bank securities for sterilisation. Keywords: sterilisation bond, central bank bonds and bills, foreign exchange reserves, emerging Asia JEL classification: E43, E50, E52, E58

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File URL: https://helda.helsinki.fi/bof/bitstream/123456789/8156/1/171403.pdf
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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 1/2013.

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Date of creation: 18 Jan 2013
Handle: RePEc:bof:bofitp:2013_001
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Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland

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  1. Yunyong Thaicharoen & Nasha Ananchotikul, 2009. "Thailand’s experiences with rising capital flows: recent challenges and policy responses," Working Papers 2009-09, Monetary Policy Group, Bank of Thailand.
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  3. Ouyang, Alice Y. & Rajan, Ramkishen S. & Willett, Thomas D., 2010. "China as a reserve sink: The evidence from offset and sterilization coefficients," Journal of International Money and Finance, Elsevier, vol. 29(5), pages 951-972, September.
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  7. Andrew Filardo & Madhusudan Mohanty & Ramon Moreno, 2012. "Central bank and government debt management: issues for monetary policy," BIS Papers chapters,in: Bank for International Settlements (ed.), Fiscal policy, public debt and monetary policy in emerging market economies, volume 67, pages 51-71 Bank for International Settlements.
  8. Andrew Filardo & Stephen Grenville, 2012. "Central bank balance sheets and foreign exchange rate regimes: understanding the nexus in Asia," BIS Papers chapters,in: Bank for International Settlements (ed.), Are central bank balance sheets in Asia too large?, volume 66, pages 76-110 Bank for International Settlements.
  9. Rakesh Mohan, 2008. "Capital flows to India," BIS Papers chapters,in: Bank for International Settlements (ed.), Financial globalisation and emerging market capital flows, volume 44, pages 235-263 Bank for International Settlements.
  10. Guonan Ma & Yan Xiandong & Liu Xi, 2013. "China’s evolving reserve requirements," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(2), pages 117-137, May.
  11. Yunyong Thaicharoen & Nasha Ananchotikul, 2008. "Thailand’s experiences with rising capital flows: recent challenges and policy responses," BIS Papers chapters,in: Bank for International Settlements (ed.), Financial globalisation and emerging market capital flows, volume 44, pages 427-465 Bank for International Settlements.
  12. Dong He & Carmen Chu & Chang Shu & Amy Wong, 2005. "Monetary Management in Mainland China in the Face of Large Capital Inflows," Working Papers 0507, Hong Kong Monetary Authority.
  13. Reinhart, Carmen M & Reinhart, Vincent R, 1999. "On the Use of Reserve Requirements in Dealing with Capital Flow Problems," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 27-54, January.
  14. Bank for International Settlements, 2009. "Capital flows and emerging market economies," CGFS Papers, Bank for International Settlements, number 33.
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