Action to reverse the effect of official intervention on the domestic money supply is called:

Question

Quizplus · Accepted Answer

Sterilization is the action taken by a central bank to offset the impact of its intervention in the foreign exchange market on the domestic money supply. This involves selling or buying domestic financial assets (such as government bonds) to agents in the private sector to nullify any increase or decrease in the domestic money supply that would have occurred otherwise due to the foreign exchange intervention.

Action to Reverse the Effect of Official Intervention on the Domestic