Foreign Exchange Intervention Rules For Central Banks A Risk Based Framework
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Foreign Exchange Intervention Rules For Central Banks A Risk Based Framework
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Author : Romain Lafarguette
language : en
Publisher: International Monetary Fund
Release Date : 2021-02-12
Foreign Exchange Intervention Rules For Central Banks A Risk Based Framework written by Romain Lafarguette and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-02-12 with Business & Economics categories.
This paper presents a rule for foreign exchange interventions (FXI), designed to preserve financial stability in floating exchange rate arrangements. The FXI rule addresses a market failure: the absence of hedging solution for tail exchange rate risk in the market (i.e. high volatility). Market impairment or overshoot of exchange rate between two equilibria could generate high volatility and threaten financial stability due to unhedged exposure to exchange rate risk in the economy. The rule uses the concept of Value at Risk (VaR) to define FXI triggers. While it provides to the market a hedge against tail risk, the rule allows the exchange rate to smoothly adjust to new equilibria. In addition, the rule is budget neutral over the medium term, encourages a prudent risk management in the market, and is more resilient to speculative attacks than other rules, such as fixed-volatility rules. The empirical methodology is backtested on Banco Mexico’s FXIs data between 2008 and 2016.
Factors Influencing Emerging Market Central Banks Decision To Intervene In Foreign Exchange Markets
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Author : Mr.Matthew S Malloy
language : en
Publisher: International Monetary Fund
Release Date : 2013-03-15
Factors Influencing Emerging Market Central Banks Decision To Intervene In Foreign Exchange Markets written by Mr.Matthew S Malloy and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-03-15 with Business & Economics categories.
Using panel data for 15 economies from 2001-12, I identify determinants of central bank foreign exchange intervention in emerging markets (“EMs”) with flexible to moderately managed exchange rates. Similar to other studies, I find that central banks tend to “lean against the wind,” buying/selling more foreign exchange in response to greater short-run and medium-run appreciation/depreciation pressures. The panel structure provides a framework to test whether other macroeconomic variables influence the different rates of reserve accumulation between economies. In testing other variables, I find evidence of both precautionary and external competitiveness motives for reserve accumulation.
Foreign Exchange Intervention
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Author : Geert J. Almekinders
language : en
Publisher: Edward Elgar Publishing
Release Date : 1995
Foreign Exchange Intervention written by Geert J. Almekinders and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with Business & Economics categories.
This book explains why central banks continue to carry out foreign exchange interventions despite their poor track record. It uses confidential daily intervention data from the Bundesbank and the Federal Reserve.
Liquidity Management Under Fixed Exchange Rate With Open Capital Account
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Author : Mariam El Hamiani Khatat
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-18
Liquidity Management Under Fixed Exchange Rate With Open Capital Account written by Mariam El Hamiani Khatat and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-18 with Business & Economics categories.
This paper introduces a theoretical framework for liquidity management under fixed exchange rate arrangement, derived from the price-specie flow mechanism of David Hume. The framework highlights that the risk of short-term money market rates un-anchoring from the uncovered interest rate parity due to money and foreign exchange market frictions could jeopardize financial stability and market development. The paper then discusses operational solutions that stabilize money market rates close to the level implied by the Uncovered Interest Rate Parity (UIP). Liquidity management under fixed exchange rate with an open capital account presents specific challenges due to: (1) the larger liquidity shocks induced by foreign reserve swings that challenge the development of money markets; and (2) more complicated liquidity forecasts. The theoretical framework is empirically tested based on the estimate of “offset” coefficients for Denmark and Hong Kong SAR.
Integrated Policy Framework Principles For The Use Of Foreign Exchange Intervention
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2023-12-21
Integrated Policy Framework Principles For The Use Of Foreign Exchange Intervention written by International Monetary Fund. Monetary and Capital Markets Department and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-12-21 with Business & Economics categories.
This note guides policy advice on the use of foreign exchange intervention (FXI) as part of the Integrated Policy Framework (IPF) in Fund surveillance. The note provides general principles for the advice in countries with flexible exchange rates and sets out three use cases for FXI that are tied to specific frictions. It explores the use of FXI as part of an overall policy response, allowing the advice to differ with shocks, frictions, and country-specific circumstances.
Two Targets Two Instruments
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Author : Mr.Jonathan David Ostry
language : en
Publisher: International Monetary Fund
Release Date : 2012-02-29
Two Targets Two Instruments written by Mr.Jonathan David Ostry and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-02-29 with Business & Economics categories.
Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Central Bank Governance And The Role Of Nonfinancial Risk Management
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Author : Ashraf Khan
language : en
Publisher: International Monetary Fund
Release Date : 2016-02-23
Central Bank Governance And The Role Of Nonfinancial Risk Management written by Ashraf Khan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-02-23 with Business & Economics categories.
This paper argues that nonfinancial risk management is an essential element of good governance of central banks. It provides a funnelled analysis, on the basis of selected literature, by (i) presenting an outline of central bank governance in general; (ii) zooming in on internal governance and organization issues of central banks; (iii) highlighting the main issues with nonfinancial risk management; and (iv) ending with recommendations for future work. It shows how attention for nonfinancial risk management has been growing, and how this has amplified the call for better governance of central banks. It stresses that in the area of nonfinancial risk management there are no crucial differences between commercial and central banks: both have people, processes, procedures, and structures. It highlights policy areas to be explored.
New Results On The Impact Of Central Bank Intervention On Deviations From Uncovered Interest Parity
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Author : Owen F. Humpage
language : en
Publisher:
Release Date : 1992
New Results On The Impact Of Central Bank Intervention On Deviations From Uncovered Interest Parity written by Owen F. Humpage and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Banks and banking, Central categories.
Foreign Exchange Intervention In Inflation Targeters In Latin America
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Author : Mr.Marcos d Chamon
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-01
Foreign Exchange Intervention In Inflation Targeters In Latin America written by Mr.Marcos d Chamon and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-01 with Business & Economics categories.
Foreign exchange intervention is widely used as a policy tool, particularly in emerging markets, but many facets of this tool remain limited, especially in the context of flexible exchange rate regimes. The Latin American experience can be informative because some of its largest countries adopted floating exchange rate regimes and inflation targeting while continuing to intervene in foreign exchange markets. This edited volume reviews detailed accounts from several Latin American countries’ central banks, and it provides insight into how and with what aim many interventions were decided and implemented. This book documents the effectiveness of intervention and pays special attention to the role of foreign exchange intervention policy within inflation-targeting monetary frameworks. The main lesson from Latin America’s foreign exchange interventions, in the context of inflation targeting, is that the region has had a considerable degree of success. Transparency and a clear communication policy have been key. For economies that are not highly dollarized, rules-based intervention helped contain financial instability and build international reserves while preserving inflation targets. The Latin American experience can help other countries in the design and implementation of their policies.
Risk Management For Central Bank Foreign Reserves
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Author : European Central Bank
language : en
Publisher:
Release Date : 2004
Risk Management For Central Bank Foreign Reserves written by European Central Bank and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Bank reserves categories.