By DARLINGTON CHILUBAFIRSTLY, should central banks intervene to control the exchange rate? Secondly, what is the point of managing the exchange rate if the price of local goods and services remains unchanged?Are such interventions political or objectively for economic reasons?Believe it or not, the answer to the first question is yes, but indirectly. The last two questions require an explanation because central banks are supposed to act in national interest.Meanwhile, the notion of national interest rarely means mutual agreement and will either be defined by those in power or those with power.Put simply, national interest will be defined by elected officials, those with financial power or those with temporary power to change the national hierarchy through elections or revolt.It is a tricky balance this national interest, even tendentious.The oldest central bank, the Riksbank of Sweden was established in 1668 as banker of the domain to secure and protect public interest.Modern central banks, like the Bank […]
CENTRAL BANKING INTERVENTIONS – POSSIBLE OUTCOMES
