Sterilized Intervention
A method used by monetary authorities to equalize the effects of foreign exchange transactions on the domestic monetary base by offsetting the purchase or sale of domestic assets within the domestic markets. The process limits the amount of domestic currency available for foreign exchange. Investopedia Says:
Sterilized intervention is a way for a country to alter its debt composition without affecting its monetary base. It is used to counter undesirable exchange-rate movements. For example, a decrease in the value of a country's domestic currency would cause a debt instrument issued in a foreign country and denominated in that foreign country's currency to be made more expensive. Related Terms:
Central Bank
Currency
Exchange Rate
Federal Reserve System
Monetary Base
Monetary Policy
Sterilization
Treasury Bill - T-Bill
Unsterilized Foreign Exchange Intervention |