A situation when more than one central bank attempts to shift the equilibrium exchange rate to support a targeted exchange rate is called
A) sterilization.
B) a currency crisis.
C) coordinated intervention.
D) an application of special drawing rights.
E) a floating exchange rate system.

Question

Quizplus · Accepted Answer

Coordinated intervention occurs when multiple central banks attempt to shift the equilibrium exchange rate to support a targeted exchange rate. This may involve buying or selling currencies in the foreign exchange market. Sterilization refers to a monetary policy action taken by a central bank to offset the effects of an intervention in the foreign exchange market. A currency crisis is a situation where there is a sharp depreciation or devaluation of a currency, often due to a loss of confidence in the economy or government. Special drawing rights are a type of international reserve asset created by the IMF. A floating exchange rate system is a system where the exchange rate is determined by market forces rather than government intervention.

A Situation When More Than One Central Bank Attempts to Shift