What is sterilization policy?

What is sterilization policy?

Sterilization is a form of monetary action in which a central bank seeks to limit the effect of inflows and outflows of capital on the money supply. Sterilization most frequently involves the purchase or sale of financial assets by a central bank and is designed to offset the effect of foreign exchange intervention.

What is impact of sterilized intervention on economy?

Because a sterilizing intervention holds the money supply unchanged at its high level, the locally available interest rates can still be low. The carry trade therefore continues to be profitable and the central bank must intervene again if it still wants to prevent depreciation.

Why is sterilized intervention ineffective?

Sterilized intervention does not provide a central bank with a means of systematically influencing its exchange rates independently of its monetary policy.

What is sterilization and types?

Sterilization can be accomplished by an amalgamation of heat, chemicals, irradiation, high pressure and filtration such as steam under pressure, dry heat, ultraviolet radiation, gas vapour sterilants, chlorine dioxide gas etc.

Why are governments interested in sterilizing their foreign exchange interventions?

Central banks use sterilization as a way to insulate or protect their economies against any negative impact from things like currency appreciation or inflation—both of which can reduce a country’s place in export competitiveness in the global market.

What is sterilization technique?

Sterilization refers to any process that removes, kills, or deactivates all forms of life (particularly microorganisms such as fungi, bacteria, spores, and unicellular eukaryotic organisms) and other biological agents such as prions present in or on a specific surface, object, or fluid.

What do you mean by sterilized?

Definition of sterilize transitive verb. : to make (something or someone) sterile: such as. a : to free from all viable microorganisms (as by the use of steam or dry heat) sterilize surgical instruments in an autoclave. b(1) : to deprive of the power of reproducing through surgery sterilize cats and dogs.

Is sterilized or unsterilized intervention more effective?

In theory, sterilized foreign exchange interventions tend to be less effective at moving exchange rates than unsterilized interventions.

What is sterilization assignment?

Sterilization is the process of killing all microorgan- isms (bacterial, viral, and fungal) with the use of ei- ther physical or chemical agents. A disinfectant is a chemical substance that kills microorganisms on in- animate objects, such as exam tables and surgical in- struments.