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Select the correct option.

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    • Avatar of doCFAdoCFA
      Participant
        • CFA Charterholder
        24 May 2018 at 11:15 am
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        ::

        In order to control a capital inflow surge,
        a sterilized intervention operation:

        A.  
        decreases a country’s monetary base.

        B.   
        increases the level of short-term interest rates.

        C.  offsets
        the excess liquidity created by FX intervention activities.

      • Avatar of Stuj79Stuj79
        Participant
          • CFA Charterholder
          24 May 2018 at 4:07 pm
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          ::

          I’ll opt for C 🙂

        • Avatar of doCFAdoCFA
          Participant
            • CFA Charterholder
            24 May 2018 at 6:16 pm
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            ::

            Yes, You are right. 

            C is correct. In a sterilized
            operation, the authorities of an emerging market country would sell domestic
            securities to the private sector to reduce the excess liquidity created by FX
            intervention activities.

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