Currency Intervention and the Global Portfolio Balance Effect: Japanese Lessons
Swiss National Bank
Robert N. McCauley
Bank for International Settlements (BIS)
University of Tokyo - Faculty of Economics
October 1, 2012
BIS Working Paper No. 389
This paper shows that the Japanese foreign exchange interventions in 2003/04 seem to have lowered long-term interest rates in a wide range of countries, including Japan. It seems that this decline was triggered by the investment of the intervention proceeds in US bonds and that a global portfolio balance effect spread the resulting decline in US yields to other bond markets, thus easing global monetary conditions.
Number of Pages in PDF File: 17
Keywords: Intervention, portfolio balance effect, Japan
JEL Classification: E5, G12, O24
Date posted: October 26, 2012
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