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Currency intervention and the global portfolio balance effect: Japanese lessons

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Currency intervention and the global portfolio balance effect: Japanese lessons, by Petra Gerlach-Kristen, Robert N. McCauley and Kazuo Ueda, Working Papers No 389, October 2012

  • “This paper shows that the Japanese foreign exchange interventions in 2003/04 seem to have lowered long-term interest rates in a wide range of countries, including Japan. It seems that this decline was triggered by the investment of the intervention proceeds in US bonds and that a global portfolio balance effect spread the resulting decline in US yields to other bond markets, thus easing global monetary conditions.”
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