| Author (Person) | Pilbeam, Keith |
|---|---|
| Series Title | Intereconomics |
| Series Details | Vol.50, No.2, March-April 2015 |
| Publication Date | March 2015 |
| ISSN | 0020-5346 |
| Content Type | Journal | Series | Blog |
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The Swiss National Bank's January 2015 decision to abandon the Swiss franc's peg to the euro led to short-term chaos in exchange markets and had a dampening effect on the Swiss economy. Some economists suggested Switzerland was poised to enter a sustained period of stagnation à la Japan. The decision also reignited policy debate on the benefits and drawbacks to central bank intervention in currency markets. While such intervention can be justified in certain situations, such as if the market is producing the 'wrong rate', it can also impose significant economic costs. The ECB's recently implemented quantitative easing programme has been regarded by many as a thinly disguised attempt to weaken the euro in order to improve the eurozone's competitiveness. However, the euro's recent weakening began well before the ECB announced its programme; moreover, previous rounds of quantitative easing by other central banks have had minimal impact on exchange rates. A series if features: + Keith Pilbeam: Intervention in the Foreign Exchange Market: Rationale, Effectiveness, Costs and Benefits + Arturo Bris: A Strong Franc: Is Switzerland the New Japan? + Cinzia Alcidi, Mikkel Barslund, Willem Pieter De Groen and Daniel Gros: The Fall in Long-term Interest Rates: Quantitative Easing Effect or Trend? |
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| Source Link | http://intereconomics.eu/archive/year/2015/2/currency-interventions-effective-policy-tool-or-shortsighted-gamble/ |
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| Subject Categories | Economic and Financial Affairs |
| Countries / Regions | Europe, Switzerland |
