The interventions of the European Central Bank: Effects, effectiveness, and policy implications
We analyze the effectiveness of the foreign exchange market interventions conducted by the European Central Bank (ECB) in the fall of 2000 to support the external stability of the euro. To this end, in a first step different channels through which interventions may influence exchange rate dynamics are discussed. In a second step, a review of the existing empirical literature on the effectiveness of central bank interventions is used as the basis for evaluating the effectiveness of the ECB's intervention policy. Against this background, high-frequency exchange-rate data are used to examine the effects of the interventions. We present evidence that the interventions only had a very short-term impact on the exchange rate path with no medium-term effects. All in all, our results suggest that the ECB's intervention policy was not effective.
|Date of creation:||2001|
|Contact details of provider:|| Postal: Deutsche Bank AG, 60272 Frankfurt am Main|
Phone: +49 69 910-31803
Fax: +49 69 910 31877
Web page: http://www.dbresearch.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jurgen Von Hagen, 1989. "Monetary targeting with exchange rate constraints: the Bundesbank in the 1980's," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 53-69.