A sterilized foreign exchange intervention would:

Question

Quizplus · Accepted Answer

A sterilized foreign exchange intervention involves buying or selling currencies in the foreign exchange market without changing the domestic monetary base. This is achieved by conducting offsetting transactions, such as selling domestic government bonds to withdraw liquidity from the domestic economy. As a result, the asset side of the central bank's balance sheet is altered, but the domestic monetary base remains unchanged.

A Sterilized Foreign Exchange Intervention Would