Mr. Istvan Mak, Financial Sector Expert (IMF) presented recent IMF work on the topic. Mr. Norbert Kiss-Mihály, Head of Department (Magyar Nemzeti Bank) presented the experience of the Hungarian Central Bank.

The presenters discussed central bank responses to impairments in money, securities and foreign exchange (FX) markets that could emerge in the wake of financial disruptions including the COVID-19 pandemic. Such interventions should typically be aimed at those markets that play a crucial role in financial intermediation and interconnected markets. Moreover, there should be a clear understanding when to intervene.

Looking at a range of countries, interventions are more frequent in inflation targeting advanced economies, given that these feature more interconnected markets, which increases contagion risk. Overall, the most frequent interventions concerned short-term funding markets, mainly for intermediaries, due to financial stability concerns. In addition, there were frequent interventions in Emerging Markets’ FX markets, due to capital outflows.

The webinar was opened by JVI Director Hervé Joly, and moderated by Reiner Martin, (JVI).


Reiner Martin, Lead Economist, JVI