• Corpus ID: 154779678

Foreign Exchange Operations and the Federal Reserve

@article{Goodfriend1996ForeignEO,
  title={Foreign Exchange Operations and the Federal Reserve},
  author={Marvin Goodfriend and Jr. J. Alfred Broaddus},
  journal={Federal Reserve Bank of Richmond Research Publications},
  year={1996}
}
Credibility for low inflation is the cornerstone of an effective monetary policy. And public support for Fed independence is the foundation of that credibility. Fed intervention in foreign exchange markets creates doubt about whether monetary policy will pursue low inflation or exchange rate objectives. Moreover, foreign exchange operations financed by the Fed undermine the Fed's independence, especially when they involve direct loans to foreign governments. For these reasons the authors… 

Sterilized Foreign Exchange Intervention: The Fed Debate in the 1960s

The Federal Reserve System began its intervention in the market for foreign exchange in 1962. Such intervention is undertaken at the behest of the Treasury. That year there was a spirited debate

The Impact of a Central Bank's Bond Market Intervention on Foreign Exchange Rates

This paper provides a framework to analyze the effect of a central bank's bond market intervention on foreign exchange rates. Using this framework, we quantify the impact of the Federal Reserve's

What Assets Should the Federal Reserve Buy?

The Fed's asset acquisition practices should adhere to two closely related principles that would support monetary policy by strengthening the Fed's independence: asset acquisition should respect the

Japanese Monetary Policy and Deflation

The price level is falling in Japan. To end deflation, the Bank of Japan should move to a strategy of actively creating bank reserves and money in response to price level deviations from an explicit

Sustaining Price Stability

Interest rate policy works to sustain price stability by stabilizing production costs against shocks to current productivity and future income prospects. The Fed should publicly target core PCE

U.S. Foreign-Exchange-Market Intervention During the Volcker-Greenspan Era

The Federal Reserve abandoned foreign-exchange-market intervention because it conflicted with the System's commitment to price stability. By the early 1980s, economists generally concluded that,

Monetary Policy in East Asia: the Case of Singapore

The Monetary Authority of Singapore conducts policy by adjusting the Singapore dollar fs effective exchange rate so as to achieve macroeconomic goals for the economy fs inflation rate and output gap.

Macroeconomic Principles and Monetary Policy

Using publicly available transcripts of FOMC meetings, Richmond Fed President Al Broaddus illustrates how he employed analytical macroeconomic principles on three occasions in the Open Market

International Market Implications of Declining Treasury Debt

This article argues that international financial markets could take declining net U.S. Treasury debt in stride under normal circumstances. First, declining net U.S. government debt does not force

Budget Deficits and Inflation: A Theoretical and Empirical Survey

Japan's fiscal position is deteriorating continuously, and some argue that a debt write-off through managed inflation will be inevitable if public debt is to increase at the present pace. This

References

SHOWING 1-10 OF 89 REFERENCES

Sterilized Foreign Exchange Intervention: The Fed Debate in the 1960s

The Federal Reserve System began its intervention in the market for foreign exchange in 1962. Such intervention is undertaken at the behest of the Treasury. That year there was a spirited debate

European Exchange Rate Credibility Before the Fall

Realignment expectations which measure exchange rate credibility are analyzed for European exchange rates, using daily financial data since the inception of the EMS. It is difficult to find

What has foreign exchange market intervention since the Plaza Agreement accomplished?

We review the conduct and scale of official intervention by monetary authorities in the U.S.A., Japan, and West Germany since the Plaza Agreement. Relative to trading volume and the stock of

What Has Foreign Market Intervention Since the Plaza Agreement Accomplished?

We review the conduct and scale of official intervention by monetary authorities in the U.S.A., Japan, and West Germany since the Plaza Agreement. Relative to trading volume and the stock of

CREDIBILITY AND MONETARY POLICY: THEORY AND EVIDENCE1

A monetary strategy is credible if the public believes that the government will actually carry out its stated plans; if their strategy is not credible, monetary authorities will find they have an

Financial Deregulation, Monetary Policy, and Central Banking

The paper analyzes the need for financial regulations in the implementation of central bank policy. It emphasizes that a central bank serves two functions. Central banks function as monetary

EXCHANGE STABILIZATION FUNDS

THIS STUDY ANALYZES and evaluates the operations of the fourteen exchange stabilization funds' established during the 1930's as devices for coping with pressing problems arising out of the

Long-Term Interest Rates and Inflation: A Fisherian Approach

In recent years, Federal Reserve (Fed) policymakers have come to rely on long-term bond yields to measure the public’slong-term inflationary expectations. The long-term bond rate plays a central role

Monetary and Fiscal Policy

Preface - An Overview: Basic Policy Models Without Rational Expectations - The Natural Rate Hypothesis and Other Matters - Rational Expectations I: Basic Theories - Rational Expectations II:

The Effectiveness of Foreign-Exchange Intervention: Recent Experience

Since the September 1985 Plaza Hotel announcement by the Group of Five industrial countries, a substantial realignment of exchange rates has been achieved. At the same time, foreign exchange market
...