Epilogue: Foreign-Exchange-Market Operations in the Twenty-First Century
Michael D. Bordo
Harvard University - Department of Economics; National Bureau of Economic Research (NBER)
Federal Reserve Bank of Cleveland
Anna J. Schwartz
City University of New York (CUNY); National Bureau of Economic Research (NBER) - NY Office
March 30, 2012
FRB of Cleveland Working Paper No. 12-07
Foreign-exchange operations did not end after the United States stopped its activist approach to intervention. Japan persisted in such operations, but avoided overt conflict 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.
Number of Pages in PDF File: 22
Keywords: intervention, Japan, Switzerland, China, developing and emerging market economies, swap lines
JEL Classification: F3, N1, N2Accepted Paper Series
Date posted: March 31, 2012
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