Czech National Bank Currency Intervention. Czech Economy Salvation or a Wrong Calculus of the Central Bank?

URBANOVSKÝ, Tomáš. Czech National Bank Currency Intervention. Czech Economy Salvation or a Wrong Calculus of the Central Bank? In Horvatova, E Kotlebova, J. ROLE OF FINANCIAL SECTOR IN SUPPORTING THE ECONOMIC RECOVERY OF CEE COUNTRIES, 8TH INTERNATIONAL CONFERENCE ON CURRENCY, BANKING AND INTERNATIONAL FINANCE. Bratislava: EKONOM, 2014, p. 429-441. ISBN 978-80-225-4034-6.

Basic information

• Original name: Czech National Bank Currency Intervention. Czech Economy Salvation or a Wrong Calculus of the Central Bank?
• Name in Czech: Devizové intervence ČNB. Spása české ekonomiky nebo chybný kalkul orgánu centrálního bankovnictví
• Authors: URBANOVSKÝ, Tomáš (203 Czech Republic, guarantor, belonging to the institution).
• Edition: Bratislava, ROLE OF FINANCIAL SECTOR IN SUPPORTING THE ECONOMIC RECOVERY OF CEE COUNTRIES, 8TH INTERNATIONAL CONFERENCE ON CURRENCY, BANKING AND INTERNATIONAL FINANCE, p. 429-441, 13 pp. 2014.
• Publisher: EKONOM

Other information

• Original language: English
• Type of outcome: Proceedings paper
• Field of Study: 50200 5.2 Economics and Business
• Country of publisher: Slovakia
• Confidentiality degree: is not subject to a state or trade secret
• Publication form: printed version "print"
• RIV identification code: RIV/00216224:14560/14:00082222
• Organization unit: Faculty of Economics and Administration
• ISBN: 978-80-225-4034-6
• UT WoS: 000363914100039
• Keywords (in Czech): devizové intervence deflace sterilizované intervence
• Keywords in English: currency intervention; deflation; sterilized intervention

Abstract

One of the most controversial and most discussed measures conducted by the CNB in the last decade is the currency intervention initiated in November 2013. The issue can be examined from many perspectives. The first part of this paper deals with the problem of deflation in general terms and the justification for the inflation targeting policy. It has been shown that due to existence of money neutrality in long term, change in price level does not have any effect on real quantities. Content of next chapter is discussion whether this intervention will really lead to a faster recovery of the Czech economy or not. Increase in consumption of households, which is major part of GDP, cannot be anticipated due to irreplaceability of imported goods. Following part of the paper focuses on assumption of sterilized intervention and it has been found out that this intervention has not been sterilized. The contents of the final part is the assessment of the last eight months and it has been proven that consumer component of aggregate demand is stagnating and price level is not increasing, so intervention cannot be considered effective.