Combating Intervention Risk

Stephen John Fisher

Chapter 5 in Central Bank Reserves and Sovereign Wealth Management, 2010, pp 140-161 from Palgrave Macmillan

Abstract: Abstract Central Banks (CB) hold foreign reserves to intervene in the currency market. The trigger for currency intervention depends on many factors that cannot be predicted — trade flows, domestic shocks, foreign shocks, speculative attacks and financial crises, as well as the monetary and fiscal policies of domestic and foreign governments. ‘Intervention risk’ — the sudden need to buy or sell foreign exchange to defend the currency — is the major risk facing a CB’s reserve holdings.

Keywords: Risk Aversion; Central Bank; Sample Path; Probability Transition Matrix; Asset Allocation (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-25081-9_5

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230250819

DOI: 10.1057/9780230250819_5

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().