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Working Paper

U.S. Monetary-Policy Evolution and U.S. Intervention

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The United States all but abandoned its foreign-exchange-market intervention operations in late 1995, when they proved corrosive to the credibility of the Federal Reserve's commitment to price stability. We view this decision as the culmination of the evolution of U.S. monetary policy over the past century from a gold standard to a fiat money regime. The abandonment of intervention was necessary to secure monetary policy credibility.
Topics
Monetary policy
10.27.2011ISSN 2573-7953 WP 11-27DOI 10.26509/frbc-wp-201127
Keywords trilemma, central-bank independence, intervention, monetary policy, swap lines, warehousing
JEL Classification Codes F3, N1, N2

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Bordo, Michael D., Owen F. Humpage, and Anna Schwartz. 2011. “U.S. Monetary-Policy Evolution and U.S. Intervention.” Federal Reserve Bank of Cleveland, Working Paper No. 11-27. https://doi.org/10.26509/frbc-wp-201127