Monetary Policy and the Exchange Rate in Colombia
The role of the exchange rate and the exchange rate regime in the monetary policy decision-making process in Colombia is described. The rationale for the intervention of the Central Bank in the FX market is explained and the experience in this regard is reviewed. Special attention is given to the seemingly varying effectiveness of different types of intervention and to the challenges posed by the sterilization of purchases of foreign currency. The exchange rate regime, FX regulation and FX policy determine the resilience of the economy in the face of external shocks and allow for the possibility of countercyclical monetary policy responses. A virtuous circle is created in which the volatility present in a flexible exchange rate regime improves the conditions for the functioning of a flexible exchange rate regime.
|Date of creation:||12 May 2011|
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- Hernando Vargas Herrera & Yanneth R Betancourt & Carlos Varela & Norberto Rodriguez, 2011.
"Effects of reserve requirements in an inflation targeting regime: the case of Colombia,"
BIS Papers chapters,
in: Bank for International Settlements (ed.), The global crisis and financial intermediation in emerging market economies, volume 54, pages 133-169
Bank for International Settlements.
- Hernando Vargas & Carlos Varela & Yanneth R. Betancourt & Norberto Rodríguez, "undated". "Effects of Reserve Requirements in an Inflation Targeting Regime: The Case of Colombia," Borradores de Economia 587, Banco de la Republica de Colombia.
- Hernando Vargas Herrera & Carlos Varela & Yanneth R. Betancourt & Norberto Rodríguez, 2010. "Effects of Reserve Requirements in an Inflation Targeting Regime: The Case of Colombia," BORRADORES DE ECONOMIA 006710, BANCO DE LA REPÚBLICA.
- Hernán Rincón & Jorge Toro, 2010.
"Are Capital Controls and Central Bank Intervention Effective?,"
BORRADORES DE ECONOMIA
007622, BANCO DE LA REPÚBLICA.
- Hernán Rincón & Jorge Toro, "undated". "Are Capital Controls and Central Bank Intervention Effective?," Borradores de Economia 625, Banco de la Republica de Colombia.
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