Suppose the Bank of England is using a managed floating exchange regime.In order to keep money supply constant the Bank of England exchanges domestic bonds for foreign bonds to slow any appreciation of the pound while keeping the British money supply unchanged.This process is known as:
A) Sterilized intervention
B) The monetary approach
C) Exchange rate intervention
D) Balancing official settlements.

Question

Quizplus · Accepted Answer

Sterilized intervention involves central banks exchanging domestic bonds for foreign bonds to offset any effects on the domestic money supply caused by foreign exchange intervention. In this scenario, the Bank of England is using sterilized intervention to keep the British money supply constant while managing the exchange rate.

Suppose the Bank of England Is Using a Managed Floating