Analysis of the effectiveness of sterilised intervention policies in China

Gaoxiu Liu, Yuqing Liu and Wanqing Lv

International Journal of Data Science, 2023, vol. 8, issue 4, 330-351

Abstract: With the change in the scale of China's foreign exchange reserves, in order to withdraw the base currency and reduce the expansion of the money supply and inflationary pressure caused by the increase in foreign exchange reserves, the scale of sterilised intervention by the central bank has also expanded. In this paper, the sterilisation coefficient and the offset coefficient are used to analyse the effectiveness of the sterilised intervention policy in China. The results show that the change in the scale of foreign exchange reserves has caused great trouble for the implementation of monetary policy in China. However, due to the reasonable use of sterilised intervention policy and sterilisation tools, the implementation effect of the sterilisation policy is better, but at the same time, the offsetting effect of changes in foreign exchange reserves on China's monetary policy is also expanding.

Keywords: foreign exchange reserve; sterilised intervention; sterilisation coefficient; offset coefficient; central bank; monetary policy. (search for similar items in EconPapers)
Date: 2023
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