国际金融第九章.pptVIP

Daniels and VanHoose Monetary Approach The Monetary Approach and Portfolio Approach to Balance-of-Payments and Exchange-Rate Determination Fundamental issues Central Bank’s foreign exchange market intervention alter the monetary base and money stock. What is the monetary approach? How does the monetary approach take effect? What is the portfolio approach? Should central bank sterilize foreign exchange intervention? Introduction The Monetary Approach focuses on the supply and demand of money and the money supply process. The monetary approach hypothesizes that BOP and exchange-rate movements result from changes in money supply and demand. See / Managed Exchange Rates: Foreign Exchange Intervention So-called Foreign Market Intervention means the buying and selling of financial assets denominated in foreign currencies to influence exchange rates. Mechanics of Foreign Exchange Intervention: (1) Intervention Transactions: via spot market transactions. Central banks also often use swap transactions to adjust the composition of their portfolios of foreign exchange reserves. (2) Leaning with the wind and Leaning against wind (See Page 219). Foreign Exchange Interventions and the Money Stock In fact, the purchases or sales of foreign-currency-denominated bank deposits are the foreign exchange intervention. Because these deposits are the assets of domestic individuals, firms, brokers, and banks, which they hold on deposit at foreign banks, the foreign exchange transactions of central banks affect the balance sheets of domestic and foreign private banks. And indirectly, therefore, it influence the domestic money stock and potentially the foreign nation’s money stock. Sterilization of Interventions A central bank policy of altering domestic credit in an opposite direction relative to any variation in foreign exchange reserves so as to prevent the monetary base from changing. So, sterilization of the sale of foreign exchange reserves requires an equal-sized e