The Foreign Exchange Interventions of the CNB as an Unconventional Instrument of Monetary Policy

Andrea Cecrdlova ()
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Andrea Cecrdlova: University of Economics in Prague

No 6910191, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: During the last crisis monetary authorities hit zero interest rates and as a result they began to use less standard instruments. However, they failed to meet the declared inflation target for a long time. The Czech National Bank (CNB) decided to use the unconventional instrument in November 2013 when the exchange rate commitment was introduced. The aim of the paper is to evaluate the decision to use the exchange rate commitment with regard to its potential side effects. The most significant side effect is the enormous amount of foreign exchange reserves, which, due to the appreciation of the domestic currency, can get the CNB into more cumulative negative values than it already is.

Keywords: CNB; monetary policy; unconventional monetary instruments; foreign exchange interventions; foreign exchange reserves. (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2018-10
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-tra
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Published in Proceedings of the Proceedings of the 10th Economics & Finance Conference, Rome, Oct 2018, pages 92-104

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:6910191

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