Question
Before January 15, 2015, the Swiss National Bank (SNB) maintained a cap of the Swiss franc at SFr1.20 per euro. That is, whenever the euro
Before January 15, 2015, the Swiss National Bank (SNB) maintained a cap of the Swiss franc at SFr1.20 per euro. That is, whenever the euro fell below SFr1.20 per euro, the SNB would intervene in the foreign exchange market. Which of the following is a consistent statement about the SNBs possible actions?
a. | When the euro fell below SFr1.20 per euro, the SNB would sell euros and buy francs. | |
b. | When the euro rose above SFr1.20 per euro, the SNB would buy euros and sell francs. | |
c. | The SNB would lose foreign reserves through foreign exchange market intervention. | |
d. | To sterilize the money supply, the SNB would have to sell domestic assets. |
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