The action taken by a country's central bank to prevent balance of payments policies from influencing the country's domestic money supply is called a:

Question

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Sterilized intervention is a monetary policy intervention taken by a central bank to offset the effect of balance of payments policies on the domestic money supply. In this intervention, the central bank buys or sells foreign currency in the market while simultaneously engaging in offsetting transactions in the domestic market to maintain the same level of domestic money supply. This helps the central bank to prevent any unwanted fluctuations in the domestic money supply due to balance of payments policies.

The Action Taken by a Country's Central Bank to Prevent