What Is the Meaning and Purpose of a Sterilized Intervention

question 2

Multiple Choice

What is the meaning and purpose of a sterilized intervention?

• A)A sterilized intervention happens when a more valuable currency is repeatedly traded to reduce a country's interest rates.
• B)A sterilized intervention happens when a less valuable currency is repeatedly traded for currencies of increasing value.
• C)A sterilized intervention happens when a central bank buys a foreign currency and also buys government securities to offset the decrease in the monetary base.
• D)A sterilized intervention happens when a central bank buys its own country's currency and also buys government securities to offset the decrease in the monetary base.

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Definitions:

Financial Markets

Platforms where individuals, companies, and governments can trade financial securities, commodities, and other fungible assets.

Financialization

The increasing dominance of financial markets, financial motives, financial institutions, and financial elites in the economy, overshadowing traditional industrial capital.

Global Integration

refers to the process of interconnecting economies, cultures, and regulatory systems across the world, leading to increased interaction and coordination on a global scale.

Free Trade Agreements

International treaties between countries that reduce or eliminate trade barriers, such as tariffs and import quotas, to encourage trade and economic cooperation.