FX intervention and domestic credit: Evidence from high-frequency micro data
Boris Hofmann () and
Hyun Song Shin
No 774, BIS Working Papers from Bank for International Settlements
We employ a rarely available high-frequency micro data set to study the impact of foreign exchange intervention on domestic credit growth. We find that sterilised purchases of dollars by the central bank dampens the flow of new domestic corporate loans in Colombia. Slowing the pace of currency appreciation plays a key role in dampening credit expansion. Our analysis sheds light on the role of FX intervention as part of the financial stability-oriented policy response to credit booms associated with capital inflow surges.
Keywords: FX intervention; credit registry; emerging markets; financial channel of exchange rates (search for similar items in EconPapers)
JEL-codes: E58 F31 F33 F41 G20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Working Paper: FX intervention and domestic credit: evidence from high-frequency micro data (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:774
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