Intervention: divine or comic?
If central banks are so reluctant to intervene in foreign-exchange markets, why do they still hold so many reserves?
THE clamour for the European Central Bank (ECB) to intervene to save the ailing euro is getting louder by the day. As the euro hit another new lifetime low of below 85 cents this week, Michael Mussa, the IMF's chief economist, said that the ECB ought to think about intervening to stop the rot. The weak euro will be discussed at the G7 meeting of central bankers and finance ministers in Prague on September 23rd. Few traders expect the G7 to agree to co-ordinated intervention—giving them yet another reason to push the euro still lower.
This article appeared in the Finance & economics section of the print edition under the headline “Intervention: divine or comic?”
From the September 23rd 2000 edition
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