2012-11-24 papers

on International Finance

Issue of 2012–11–24
one paper chosen by
Vimal Balasubramaniam, University of Oxford

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

Currency intervention and the global portfolio balance effect: Japanese lessons

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
URL:	https://d.repec.org/n?u=RePEc:bis:biswps:389

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