A sterilized foreign exchange intervention would:

Question

Quizplus · Accepted Answer

A sterilized foreign exchange intervention involves a central bank buying or selling foreign currency in exchange for its own currency in the forex market, and simultaneously conducting an offsetting operation (usually in the domestic bond market) to neutralize the impact on the domestic money supply. This alters the composition of the asset side of the central bank's balance sheet (by changing its holdings of foreign currency and domestic bonds) but leaves the domestic monetary base unchanged.

A Sterilized Foreign Exchange Intervention Would