Sudden stops and optimal foreign exchange intervention

Sudden Stops and Exchange Rate Strategies in Latin America

Optimal Intervention in the Foreign Exchange Market: The Case of Iran

In a managed floating exchange rate regime, one of the most important issues is the degree to which the monetary authorities intervene in the foreign exchange market.  The appropriate level of intervention in the foreign exchange market can be discussed in a framework which emphasizes the trade-off between changes in the country’s level of international reserves and minimizes the country’s real...

Foreign exchange intervention in Colombia

This paper describes the Banco de la República’s FX intervention policy, with a focus on its objectives and main features. It then argues, based on a review of the literature on the effectiveness of sterilized intervention in Colombia, that this tool is not a useful way of coping with the challenges posed by medium-term external factors such as quantitative easing in advanced economies, reduced...

Smoothing sudden stops

Emerging economies are often exposed to sudden shortages of international financial resources. Yet domestic agents do not seem to take preventive measures against these sudden stops. We highlight the central role played by the limited development of ex ante (insurance) and ex post (spot) domestic financial markets in generating this collective undervaluation of international resources. We study...

Southeastern Europe: Financial Deepening, Foreign Banks and Sudden Stops in Capital Flows

FOCUS ON EUROPEAN ECONOMIC INTEGRATION Q1/09