Reserve portfolios prior to the Global Financial Crisis provided positive (low) returns for central banks or had extremely low probabilities of earning negative returns. In the wake of the crisis, expansionary monetary policy created a low yield environment at a scale that was never seen before....

In the wake of the Lehman crisis, intervention in the foreign exchange market has been a topic of increasing relevance in central banking, particularly for small and medium open economies like Argentina. This has implied a change in focus to deal with some problems arising from the combination...

The significant depreciation of the Polish zloty in the second half of 2011, difficult to explain by fundamentals, was accompanied by a large increase in exchange rate volatility. The foreign exchange interventions carried out by the National Bank of Poland at that time were aimed at reducing...

The zero level of interest rates constitutes a limit of this standard monetary policy instrument. Based on the example of the Czech Republic we argue that in such a situation foreign exchange interventions represent a meaningful monetary policy tool for small open economies not facing serious...

The main goal of this study is to develop a dynamic equilibrium model of central bank swap lines that helps understand the recent observed behaviors of foreign reserves and to analyze the potential effect of the Federal Reserves' foreign exchange swap lines on the determination of international...

Are countries chronically resisting revaluations vulnerable to speculative attacks? I study the timing of a Central Bank's decision to optimally abandon a currency peg in order to avoid accumulating excessive foreign currency reserves on its balance sheet. The central assumption is that foreign...

This paper analyses the impact of central bank interven-tions in the inflation targeting regime. The results of empirical stud-ies in this paper show if there is a shock of the exchange rate, which would lead to depreciation of the exchange rate, a central bank may decide to mush instability on...

During the 2007-10 financial crisis, central banks accumulated a vast amount of experience in acting as lenders of last resort. This paper reviews the various ways that central banks provided emergency liquidity assistance (ELA) during the crisis, and discusses issues for the design of ELA...

After the Fed adopted its unconventional monetary policy, countries with strong surpluses faced fewer challenges than did those with more open economies and strong financial linkages with developed economies. In the case of Saudi Arabia, fiscal policy remains dominant due to the structure of the...

This note reviews central banks' views on the objectives, methods and effectiveness of foreign exchange intervention, according to their responses to a survey questionnaire. Due to the recent global financial crisis, objectives have shifted to focus more on curbing capital flows and exchange...