The limitations of foreign-exchange intervention: lessons from Switzerland

Owen Humpage

Economic Commentary, 2013, issue Oct

Abstract: Since the mid-1990s, monetary authorities in most large developed countries have backed away from foreign-exchange intervention?buying and selling foreign currencies to influence exchange rates. Switzerland?s recent experience goes a long way to illustrate why: Foreign-exchange intervention did not afford the Swiss National Bank with a means of systematically affecting the franc independent of Swiss monetary policy, and it left the Bank exposed to foreign-exchange losses. To affect exchange rates, central banks must change their monetary policies.>

Date: 2013
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