Currency intervention: the profitability of some recent international experiences

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Enzo Cassino; Michelle Lewis
In recent years there have been high profile foreign exchange interventions by the Swiss National Bank (SNB) and the Bank of Japan (BoJ). There can be several reasons for a central bank to intervene in the currency market, including trying to stabilise the level of the exchange rate, reduce its volatility, or to inject liquidity into the market. Although central banks do not usually intervene solely to generate profits, the profitability (or lack of it) of intervention is of interest to central banks, fiscal authorities and financial market participants. Unprofitable intervention may damage the central bank's credibility in financial markets, reduce the likelihood of future intervention and attract greater scrutiny from fiscal authorities and government.