A sterilized central bank intervention does not affect the domestic money supply.

Question

Quizplus · Accepted Answer

A sterilized central bank intervention involves the central bank buying or selling foreign currency in the foreign exchange market but simultaneously offsetting any impact on the domestic money supply through an equal and opposite transaction, usually by buying or selling government securities. Thus, the domestic money supply remains unchanged.

A Sterilized Central Bank Intervention Does Not Affect the Domestic