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See detailWhy do central bank intervene secretly? Preliminary evidence from the BoJ
Beine, Michel UL; Bernal, Oscar

in Journal of International Financial Markets, Institutions and Money (2006), 17(3), 291-306

This paper empirically investigates the main determinants of secret interventions in the foreign exchange (FX) market. Using the recent experience of the Bank of Japan, we estimate a model that explains ... [more ▼]

This paper empirically investigates the main determinants of secret interventions in the foreign exchange (FX) market. Using the recent experience of the Bank of Japan, we estimate a model that explains the share of secret to reported interventions in the FX market. Two sets of determinants are clearly identified: the first is related to the probability of detection of the central bank orders by market participants; the second to the central bank’s internal decision to opt for secrecy. Our estimations support the arguments of current microstructure theories that rationalize the use of secret interventions. [less ▲]

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