Reserves Management and Foreign Exchange Intervention
4 Pages Posted: 13 Dec 2019
Date Written: October 31, 2019
In recent years, emerging market economies (EMEs) have built up their foreign reserves. On one hand, this has been driven by accommodative monetary policies of advanced economies. On the other hand, EMEs have accumulated reserves to cope with potential financial market shocks and to strengthen domestic market resilience. This note suggests that the monetary policy impact of central banks’ FX spot market interventions depends on whether they can be fully sterilised. We also touch on the practices of the People’s Bank of China in diversifying its FX reserves and outline various ways in which the effectiveness of its reserves management will be further improved.
Full Publication: Reserve Management and FX Intervention
Keywords: foreign reserve, FX interventions, emerging market economies and China
JEL Classification: E58, F31
Suggested Citation: Suggested Citation