Download Microsoft Word - Money banking and Financial markets Assignment

INFORMATION AND COMMUNICATION UNIVERSITY
School of humanities and social sciences
NAME:
Isabel KapembwaChilambwe
SIN:
1301230527
COURSE:
Money ,Banking and Financial Markets
PROGRAMME:
Bachelor of Arts Business Administration
SEMESTER:
7
ASSIGNMENT:
1
Introduction
This paper contains all the answers to the assignment questions. It has been answered in a way
that the lecturer instructed .I hope the answers given will meet the expectation of the lecturer.
Question 1
INTERNAL REPORT
TO: Governor
FROM: Isabel Chilambwe-Chairperson
DATE: 20THJuly 2016
SUBJECT: MEASURES AND POLICIES TO MANAGE EXCHANGE RATES IN
ZAMBIA
Introduction
Foreign exchange market and management of exchange rate of a country’s currency are two
key areas that influence the economic well-being of the general public. The exchange rate of a
country’s currency is the value of its money for international trade in goods, services and
finance and, therefore, it is part and parcel of the monetary condition of a country. In
macroeconomic perspective, foreign exchange policies are instrumental in mobilization of
foreign savings and capital to fill the domestic resource gap and expand investments. Various
public views are often expressed as to how the central banks should decide exchange rate
policies and what factors should be taken into consideration. Looking at the Zambian economy,
we need to put certain measures into consideration before the economy elapses. The following
discussed in the passage will be able to maintain or boost the Zambian economy.
WAYS OF INTERVENING WITH THE ZAMBIAN CURRENT EXCHANGE RATE
Basically, all the methods adopted to implement exchange rate control can be classified under
two groups namely;
a. Direct and indirect methods
If the exchange control strategy affects the conversion rate straight away then it is called as the
direct method. If the tactic affects some other sector but finally influences a change in the
exchange rate then it is called as the indirect method.
b. Unilateral, bilateral and multilateral methods
Unilateral methods are strategies implemented by the central bank of a country without taking
into consideration the opinion of other countries. Bilateral and multilateral methods are those
exchange rate control mechanisms applied with mutual consent of two or more countries.
Unilateral methods
Exchange intervention or pegging
It is a soft form of intervention in the market. As per this strategy, the central bank of a country
will intervene in the market to bring the exchange rate to a desired level, if there is a concern
about speculators driving the price too high or low.
If the central bank buys the currency with an intention to increase the exchange rate then the
currency is said to be pegged up. Similarly, the currency is stated to be pegged down when the
central bank intervenes in the market to decrease the exchange rate. It should be noted that the
intervention will not cause permanent trend change.
Foreign currency exchange control and restrictions
Foreign exchange control refers to the process of restricting transactions involving foreign
exchange either by a government or the central bank. When foreign exchange control is in force
the market forces will not be able to operate freely because of the restrictions imposed. Thus,
the rate of exchange would differ from the one that will exist in the free market scenario. It is
done with an intention to achieve economic stability. In fact, the International Monetary Fund
has a specially laid out provision named article 14, which strictly allows only transitional
economies to implement foreign exchange controls. Notwithstanding the provision, in the
modern era, to shield the economy from unexpected currency exchange rate volatility, almost
all countries employ foreign exchange controls in some form or the other. By controlling the
demand and supply of currency, the central bank of a country can influence the exchange rate.
The following are the widely adopted measures to keep the exchange rate under check:
i. Blocked account
The bank accounts of foreigners are blocked under this system. If there is a dire necessity the
central bank will even transfer funds from all the blocked accounts into one single account.
However, it will create bad impression about the country thereby leading to lasting negative
effects on the economy as a whole.
ii. Multiple exchange rates
Under this system, a central bank will have total control over the foreign currency and offer
different rates for purchase and sale by the importers and exporters respectively. This is done
to control the capital outflow from the country. It can be construed as rationing of foreign
currency by price instead of volume. The system is complex and only creates additional
headaches to the central bank.
iii. Rationing of foreign exchange
In this method, the control over foreign exchange will solely lie in the hands of the central bank,
which will decide the quantum of foreign exchange to be distributed for every incoming request.
No individual or corporate can hold foreign currency. Only urgent needs would be considered.
iv. Exchange Equalization Account (EEA)
To control short-term volatility in the exchange rate, the central bank of UK, following the exit
from the Gold Standard, created a fund named Exchange Equalization Account in 1932 to
prevent unwanted volatility in the exchange rate of Pound Sterling. The strategy was later
adopted by USA (Exchange Stabilization Fund) and other European countries including
Switzerland and France.
Bilateral and multilateral methods
a. Payment agreements
Under this system, the debtor and creditor country enters into a payment agreement to overcome
the delay in the settlement of international transactions. The agreement will stipulate the
methods to be followed for controlling the exchange rate volatility. Usually, the method
includes but not limited to the controlled distribution and rationing of the foreign exchange.
b. Clearing agreements
This exchange rate control strategy is implemented through an agreement between two or more
countries. Based on the agreement, the exporters and importers respectively will receive
proceeds and make payments in their domestic currency. For this purpose a clearing account
with the central bank is used. Thus, the need for foreign exchange is avoided, which in turn
reduces the exchange rate volatility. The system was used by Germany and Switzerland during
great depression in 1930.
Standstill agreements
Under this system, through a moratorium, a central bank converts short term debt into longterm debt. Such a process offers adequate time for repayment. This removes the downward
pressure on the exchange rate. The system was implemented by Germany in 1931.
d. Compensation agreement
The process involves a barter agreement between two countries. One country will be a net
exporter and other one will be a net importer. The value of exports and imports will be equal.
Thus, the need for a foreign currency is avoided and the exchange rate remains stable.
Transfer moratoria
Under this system, the central bank bans all kind of payments to creditors abroad. The debtors
should make domestic currency payment to the central bank, which will disburse funds when
there is overall improvement in foreign exchange reserves.
Indirect methods
Regulation of bank interest rates
When bank interest rate is increased, capital inflow (through foreign investors) will go up. This
will increase the demand for domestic currency thereby making the exchange rate stronger. The
opposite scenario happens when the interest rate is lowered. Thus, whenever it is necessary, the
central bank indirectly controls the exchange rate by altering the bank interest rates.
International trade regulations
When the balance of trade becomes unfavorable, a government can impose import restrictions
through a series of measures (tough clauses, changes in policy, quota system and additional
tariffs). Simultaneously, exports can be promoted (international business exhibitions, subsidies
etc.). This will ultimately make imports unattractive and boost exports. The net gain in the
foreign exchange reserves will obviously strengthen the exchange rate.
c. Gold import policy
Barring few countries in Africa, almost all others are net importers of gold. By restricting
(increasing import duties) the import of gold, the exchange rate can be altered. This tactics is
often used by India, which imports about 700tons of gold every year. When import decreases,
foreign exchange reserves increases thereby resulting in a better exchange rate.
Currency intervention, also known as foreign exchange market intervention or currency
manipulation is a monetary tool applied by central banks. It occurs when a government buys or
sells foreign currency, to push the exchange rate of its own currency away from equilibrium
value or to prevent the exchange rate from moving toward its equilibrium value.
Indirect intervention
Indirect currency intervention is a policy that influences the exchange rate indirectly. Some
examples are capital controls(taxes or restrictions on international transactions in assets), and
exchange controls (the restriction of trade in currencies).Those policies may lead to
inefficiencies or reduce market confidence, but can be used as an emergency damage control.
Non-sterilization intervention
In general, there is a consensus in the profession that non-sterilized intervention is effective.
Similarly to the monetary policy, non- sterilized intervention influences the exchange rate by
inducing changes in the stock of the monetary base, which, in turn, induces changes in broader
monetary aggregates, interest rates, market expectations and ultimately the exchange rate. As
we have shown in the previous example, the purchase of foreign-currency bonds leads to the
increase of home-currency money supply and thus a decrease of the exchange rate.
Conclusion
In conclusion, central banks intervene in foreign exchange markets to achieve a variety of
overall economic objectives: controlling inflation, maintaining competitiveness, or maintaining
financial stability. The precise objectives of policy and how they are reflected in currency
manipulation depend on a number of factors, including the stage of a country's development,
the degree of financial market development and integration, and the country's overall
vulnerability to shock. Theoretically there is no limit for the rise or fall of a paper currency.
Thus, adverse changes in the exchange rates will create unmanageable economic instability.
When the currency of a country strengthens (rise in the exchange rate) there will be positive
effects (rising productivity, lower unemployment, high economic growth, incentives to cut cots
etc.,) overall. However, if a currency becomes stronger because of speculative activities then it
would lead to a recession. Swiss Franc is a classic example for a speculation driven currency.
Problems in the USA and the Euro zone naturally lure investors to Switzerland, which is
considered as a safe haven for investments. Thus, Swiss Franc often sees fundamental
overvaluation and the central bank should intervene to prevent the country from falling into
recession.
Results in exchange rate stability.
Enables correcting adverse balance of payment scenario.
Prevents depletion of gold reserves and foreign exchange reserves.
Preserves capital flight.
Fuels economic growth and stability.
Disadvantages of foreign exchange control
Indirectly increases the level of administrative corruption.
A large number of competent officials are required to manage the smooth functioning of the
economy.
Creates misunderstanding with major economic powers.
Multinational companies are discouraged from making large commitments.
By and large, fundamental disequilibrium is created.
Volume of international trade declines as a whole.
Exchange control measures can be considered as a double-edged sword. There may be situations
where exchange control measures would be temporarily necessary. However, stringent and
hasty decisions can put a country’s economy into an unrecoverable financial chaos.
Question Two
a)
Financial Institutions or Financial intermediaries serve a very pivotal role in any country
economic system .A financial institution is an institution that provides financial services for its
clients or members. These are institutionswhich connect the savers tothe borrowers through
financial intermediation. At the heart of every financial system lies acentral bank. It controls a
nation’s money, and the money supply is a vital component of the economy. Thus, central banks
use several definitions tomeasure the money supply. One of the most important financial
services provided by financial institutions is acting as financial intermediary. Most financial
institutions are regulated by government.
The four broad categories of financial institutions that exist today are:
Securities Market Institutions
Securities market institutions are the investment bankers, brokers, dealers, and
organizedexchanges. These institutions enhance the liquidity of the secondary markets.
However, these institutions are not financial intermediaries, and they do not link the savers to
the borrowers. Instead, the securities market institutions help the savers locate the borrowers.
Prominent securities market institution is the investment bank. An investment bank helps
corporations issue new stock and bonds, or it helps a local or state government issues newbonds.
Furthermore, an investment bank could help a corporation take over another.
Consequently, the investment bank is an influential player in the primary market.
Forexample, Ford wants to build a new factory and decides to issue new stock. New stock
willprovide funds that Ford can use to build the factory. Ford will go to an investment bank,
and theinvestment bank will assist Ford in creating the new securities. Then the investment
bank sellsthese new Ford stock to customers. If these customers want to sell their stock,
subsequently,they sell them on the secondary markets or organized ex Process of issuing new
stock called underwriting. Investment bank guarantees a stock or bond price to the corporation.
Then the investment banksells the new stock or bond for a higher price. Greater price is the
investment banker’s profit.Furthermore, investment banks may work together, which are called
syndicates. One investmentbank acts as the manager and retains part of the profits while other
investments banks help to sell the new securities.
Investment Institutions
Investment institutions are mutual funds and finance companies. A mutual fundmanager
groups together funds from many investors and invests the money in a variety of stocks.
Consequently, a mutual fund diversifies stocks, and it lowers investors’ risk. For example,
youstart your own mutual fund and offer investors a chance to invest in this fund. You take
themoney and buy 30 different corporate stocks. The Coca-Cola stock rises one day while the
valueof IBM stock falls. Overall, the average of the fund’s 30 stocks should earn a return to
your fundand to the investors. If you bought only Kmart corporate stock, you would lose your
investmentif this company bankrupts.Mutual fund companies have different strategies and
characteristics, and well-knownmutual fund companies are Fidelity, Vanguard, and Dreyfus.
Mutual fund companies developstrategies where they only buy stock in certain industries, large
companies, or foreigncompany’s stock. Furthermore, the mutual fund company may issue a
fixed number of shares toMoney, Banking, and International Finance the fund called closedend mutual funds. Then investors may buy and sell these shares in overthe-counter markets,
just like stock. Thus, the mutual fund company does not buy its shares backfor closed-end
mutual funds. A mutual fund company may offer another alternative called open ended.
Mutual funds:
Mutual Fund Company can buy back shares to the fund, and the price of theshares is tied to the
value of the stock in the fund. Finally, the mutual fund managers use twomethods to earn profits.
First, fund managers charge management fees for no-load funds,usually 0.5% of asset value.
Secondly, the fund managers charge a commission for selling orpurchasing of shares for load
funds. The load is the commission that lowers the fund’s value.
Money-market mutual funds are similar to mutual funds. However, the fund manager buys
only money market securities, and the fund excludes corporate stock. Theory behind
moneymarketmutual funds is simple. If you have five friends with $2,000 each, and they want
to buy aTreasury bill with a minimum face value of $10,000, then your friends can pool their
moneytogether and buy one T-bill. Once the T-bill matured, your friends split the interest
amongthemselves.Money-market mutual funds are very popular because these funds offer
check-writingprivileges, and some investors do not want to tie up their funds for a long time.
Moreover, thevalue of the fund does not change much, when interest rates changes because
money marketsecurities have maturities less than one year.
Commercial banks offer money market deposit accountsthat are similar to the moneymarket
mutual fund. The two funds differ because the Federal Deposit Insurance Corporation (FDIC)
insures the money market deposit accounts, while it does not insure money-marketmutual
funds. If your bank bankrupted and you invested in money market deposit accounts,
subsequently, you are guaranteed not to lose your funds up to the maximum insured amount.
Finance companiesare another investment institution, and they raise money by sellingstock,
bonds, and commercial paper. Commercial paper is a short-term loan with a maximummaturity
of 270 days, and a well-known bank or corporation can issue it. Commercial paper is aform of
direct finance and has no collateral. Furthermore, finance companies lend to consumersfor
furniture, appliances, cars, home-improvement loans, or they lend to small businesses.
Somecorporations created their own finance companies to help consumers buy their products.
Contractual saving institutions
These are insurance companies and pension funds. InsuranceCompaniesprovide protection for
people who buy insurance policies. Insurance policy preventsfinancial hardship, such as a
medical emergency, car accident, or the death of a family member.Insurance companies are
financial intermediaries because they link the funds from thepolicyholders to the financial
markets. Policyholders make periodical payments to the insurancecompany called premiums.
Insurance company will invest the premiums in the financialmarkets. For the insurance
company to earn a profit, the amount of interest earned in thefinancial markets plus the total
amount of premiums must exceed the amount paid for claims. Commissions may limit
premiums, minimizefraud, and prevent the insurance companies from investing in risky
securities.
First type of insurance company is a life insurance company. These companies purchase longterm corporate bonds and commercial mortgages because they can predict future payments with
high accuracy. Furthermore, the insurance companies are organized in two ways: Mutual
company or stock company. Insurance policyholders own a mutual company because the
insurance policy functions as corporate stock, while a stock companyis a corporation that issues
stock. Thus, the shareholders own the company, while the insurance policyholders do not. Stock
company is more common because a stock company has more funding sources. They receive
funding by selling stock to shareholders, and receive revenue by selling insurance policies. Most
policies issued are called term life policies. Person buying the life insurance must pay the
premium for the rest of his life. These policies are popular because the policyholder can borrow
against the value of the life insurance policy, when he retires. Borrowing against insurance is
an annuity. An annuity ypays a retired person a specific amount of money each year.
Second type of insurance company is property and casualty insurance companies. They are
organized as either a stock company or mutual company, and they insure against theft, illness,
fire, earthquakes, and car accidents. These companies tend to purchase liquid, short-term
assetsbecause these companies cannot accurately predict the amount of future claims.
Insurancecompanies charge premiums that correspond to the chance of the event occurring.
Unfortunately, insurance companies have two problems, whenselling insurance policies:
Adverse selection and moral hazard. Adverse selection means aperson who buys insurance has
more information than the insurance company. For example, aperson knows he has a heart
problem and decides to buy a very large life insurance policy, andhe hides this information.
Moral hazard means people buying insurance becomes more carelessthan when they did not
buy insurance. For instance, a person buys theft insurance for his home,and this person stops
locking his windows and doors when he leaves, increasing the risk aburglar will break into his
home. However the Insurance companies have two strategies to combat the problems of moral
hazard andadverse selection. First, insurance companies gather information about the policy
holders, such as driving records, medical records, and credit histories. Consequently, the
insurance companycharges a higher premium to a person who is more likely to file a claim, a
risk-based premium.
Secondly, insurance companies impose a deductible. When a person makes a claim, the
personmust pay the first portion. For example, a person buys health insurance with a $500
deductible.After this person has paid the first $500 to a doctor, then the insurance company
pays theremainder of the claim. This passes some of the responsibility to the person holding
theinsurance policy. Finally, a person could buy insurance with smaller premiums but with
agreater deductible.
Pension funds are another contractual savings institution. Many people save money for
retirement, and pension funds become a vital form of saving. Some employers sponsor
pensionfunds as a job benefit, or people can voluntarily pay into personal retirement accounts.
Then thefinancial companies manage the pension funds, and they invest pension funds into the
financialmarkets. Pension fund managers can accurately predict when people will retire and
usuallyinvest in long-term securities, such as stocks, bonds, and mortgages. A person can only
receivebenefits from the pension fund after the person becomes vested. Vested means
employees mustwork for their employer for a time period before they can receive the benefits
from the pensionplan. Time period varies for the pension funds. For example, some city
governments require aperson to be employed by the city for 10 years before this person becomes
100% vested in thecity’s pension plan.
Employers have three reasons to offer pension plans to employees. First, the pension fund
managers can more efficiently manage the fund, lowering the pension funds’ transaction costs.
Second, the pension funds may offer benefits such as life annuities. A life annuity is a worker
contributes money into the annuity until he retires. Then the worker receives regular payments
every year from the annuity until his death. Life annuities could be expensive if a worker buys
them individually. However, a large employer with many employees can request discounts
frompension plans.
Finally, the government does not tax the pension fund as workers invest funds into it, allowing
the fund to grow faster. Nevertheless, government usually imposes taxes on
withdrawals from a pension fund. If the employer offered higher wages and no pension plans
tothe employees, then the government taxes the greater income, reducing the amount an
employeecould invest into a retirement plan.
Employers have two choices for the ownership of a pension plan. First, employees own the
value of the funds in the pension plan, called a defined contribution plan. If the pension fund
Isprofitable, subsequently, the retired employees will receive greater pension income. If the
pension fund is not profitable, then the retired employees will receive a low pension income.
Companies that have a defined-contribution plan are likely to invest the pension funds into the
companies’ own stock. That way, employees have an incentive to be more productive because
the value of their pension plan depends on their company’s profitability. However, this
pensionfund becomes dangerous if this company bankrupts. Then the employees own worthless
stock.One infamous case was the Enron collapse in 2001. Some employees were millionaires
untiltheir stock portfolios collapsed in value overnight. Second, the most common type of plan
is thedefined-benefit plan. An employer promises a worker a specific amount of benefits that
arebased on the employee’s earnings and years of service to the company. If this pension fund
isprofitable, the company pays the promised benefits and retains the funds that are not paid to
theretired employees. If the pension fund is unprofitable, then the company pays the
promisedbenefits out of its own pocket.
Unfortunately, a pension fund will bankrupt, when the company where the employees work
bankrupts. Consequently, Congress created the Pension Benefit Guaranty Corporation that
insures pension fund benefits up to a limit if the company cannot meet its obligations. Some
economists believe a pension fund disaster will occur for state and local government retirees
Depository Institutions and Savings institutions
Depository institutionsaccept deposits and make loans. Thus, they are intermediaries that
link the savers to borrowers. Commercial banks are the largest and dominate the depository
Institutions. Many borrowers seek bank loans for mortgages, car loans, or credit cards. Savers
have three reasons to deposit their savings in a bank than invest directly into the financial
markets. First, the bank deposits are liquid. A depositor can quickly exchange his bank
depositfor cash. Secondly, the banks gather information about their borrowers, lowering the
risk of loandefault. Banks hire financial specialist who monitors investments. On the other hand,
an investorwould spend much time and effort to monitor his or her investments in the financial
markets. Savings institutions are another depository institution. Originally, these institutions
accepted deposits and granted low-cost mortgages for homebuyers
Finally, banks reduce the risk by lending to a variety of borrowers. Consequently, commercial
banks are important for a community because its role of accepting deposits and granting loans.
b)
The term structure of interest rates is the relationship between interest rates or bond yields and
different terms or maturities. The term structure of interest rates is also known as a yield curve
and it plays a central role in an economy. The term structure reflects expectations of market
participants about future changes in interest rates and their assessments of money policy
conditions.
The yield curve is the line that plots the interest rates, at a set point in time, of bolds having
equal credit quality, but differing maturity dates. The most frequently reported yield curve
compares the three-month, two-year, and five-year and 30-year U.S treasury debt. This yield
curve is used as a benchmark for other debt in the market, such as mortgage rates or banks
lending rates. The curve is also used to predict changes in economic output and growth.
The three main theories that try to describe the future yield curve are:
Pure expectation theory, Liquidity preference theory and market segmentation theory
Pure expectation theory
This is the smallest and most direct of the three theories. The theory explains the yield curve in
terms of expected short term rates. It is based on the idea that two year yield is equal to a one
year bond today plus the expected return on a one year from today. The one weakness of this
theory is that it assumes that investors have no preference when it comes to different maturities
and the risks associated with them.
Liquidity Preference Theory
This theory states that investors want to be compensated for interest rates risk that is associated
with long term issues. Because of the longer maturity, there is a greater price volatility
associated with these securities. The structure is determined by future expectations of the rates
and yield premium for interest rate risk. Because interest rate risk increases with maturity, the
yield premium will also increase with maturity. Also known as the biased Expectation theory.
Market Segmentation Theory
This type of theory deals with the supply and demand in a certain maturity sector, which
determines the interest rates for that sector. It can be used to explain just about every type of
yield curvean investor can come across in the market. An off shoot to this theory is that if an
investor wants to go out of his sector, he will want to be compensated for taking on that
additional risk. This is known as the preferred habitat theory.
c)
Default risk is the event in which companies or individuals will be unable to make the required
payments on their debt obligations. Lenders and investors are exposed to default risk in virtually
all forms of credit extensions. To mitigate the impact of default risk, lenders often charge rates
of return that correspond the debtor’s level of default risk. The higher the risk, the higher the
required return, and vice versa.
The default risk is the risk that a debtor will be unable to pay back its
loans. Default risk goes up if a debtor has large number ofliabilities and poorcashflow. Genera
lly speaking, companies andpersonswith high default risk stand a greaterchance of a loan bein
g denied and pay a higher interest rates on the loans they do receive.
Default risk is the possibility a borrower will not repay the principal and/or interest on a loan
The default risk is the risk that an insurer of a bond may be unable to make timely principal and
interest payments. It is the possibility that a borrower will be unable to meet interest and\or
principal repayment obligation on a loan agreement. Default risk has a significant effect on the
value of a bond: if a borrower’s ability to repay debt is impaired, default risk is higher and the
value of the bond will decline.
Default free bonds are theoretical bonds that repay interest and principal with absolute certainty.
The rate of return would be the risk free interest rate. Default free bonds are bonds with no
default risk.In practice government bonds are treated as risk free bonds, as governments can
raise taxes or indeed print money to repay their domestic currency debt. Treasury bills are often
considered to be risk free bonds while corporate bonds are debt securities issued by a
corporation and sold to investors. The backing for the bond is usually the payment ability of the
company, which is typically money to be earned from future operations. In some cases the
company physical assets can be used as collateral forbonds. Corporate bonds are considered a
higher risk than government bonds. As a result, interest’s rates are almost always higher.
Corporate bonds offer a higher yield compared to some other investments but for a price. Most
corporate bonds are debentures meaning they are not secured by collateral. Investors of such
bonds must assume not only interest rates risks but also credit risk, the chance that the
corporateassurer will default on its debt obligations.
References

Joseph E. Gagnon, “Policy Brief 12-19”, Peterson Institute for International Economic,
2012.

Bank for International Settlements, BIS Paper No. 24, Foreign exchange market
intervention in emerging markets: motives, techniques and implications, (2005).

LucioSarno and Mark P. Taylor, “Official Intervention in the Foreign Exchange Market:
Is It Effective and, If So, How Does It Work?,” Journal of Economic Literature 39.3
(2001): 839-68.

Obstfeld,
Maurice
(1996). Foundations
of
International
Finance.
Boston:
Massachusetts Institute of Technology. pp. 597–599. ISBN 0-262-15047-6.

Neely, Christopher (November–December 1999). "An Introduction to Capital
Controls". Federal Reserve Bank of St. Louis Review: 13–30.

Tyalor, Mark; LucioSarno (September 2001). "Official Intervention in the Foreign Exchange Market:
Is It Effective and, If So, How Does It Work?" (PDF). Journal of Economic Literature: 839–868.

Mussa, Michael (1981). The Role of Official Intervention. VA: George Mason
University Press.

Gerlach, Petra; Rober McCauley; Kazuo Ueda (October 2011). "Currency Intervention
and the Global Portfolio Balance Effect".

Source: Ken Szulczyk. “A Central Bank Intervenes with its Currency Exchange
Rate.” Money, Banking, and International Finance. Boundless, 26 May. 2016.
Retrieved
30
May.
2016
from https://www.boundless.com/users/233416/textbooks/money-banking-andinternational-finance/the-fed-s-balance-sheet-12/the-fed-s-balance-sheet-33/a-centralbank-intervenes-with-its-currency-exchange-rate-112-15210/

Source: Ken Szulczyk. “A Central Bank Intervenes with its Currency Exchange
Rate.” Money, Banking, and International Finance. Boundless, 26 May. 2016.
Retrieved
30
May.
2016
from https://www.boundless.com/users/233416/textbooks/money-banking-andinternational-finance/the-fed-s-balance-sheet-12/the-fed-s-balance-sheet-33/a-centralbank-intervenes-with-its-currency-exchange-rate-112-15210/Monetary
Measures,Fiscal Measures and other measures