nep-ifn New Economics Papers
on International Finance
Issue of 2012‒11‒24
one paper chosen by
Vimal Balasubramaniam
University of Oxford

  1. Currency intervention and the global portfolio balance effect: Japanese lessons By Petra Gerlach-Kristen; Robert N McCauley

  1. By: Petra Gerlach-Kristen; Robert N McCauley
    Abstract: This paper shows that the Japanese foreign exchange interventions in 2003/04 seem to have lowered long-term interest rates in a wide range of countries, including Japan. It seems that this decline was triggered by the investment of the intervention proceeds in US bonds and that a global portfolio balance effect spread the resulting decline in US yields to other bond markets, thus easing global monetary conditions.
    Keywords: Intervention, portfolio balance effect, Japan
    Date: 2012–10

This nep-ifn issue is ©2012 by Vimal Balasubramaniam. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.