Czech Interventions

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Czech Interventions

Hello guys, as you know my name is Robert, this is Matej and Richard and we are going to tell you something about the interventions of the Czech National Bank(CNB) and influences on the Czech crown.

What is the intervention

First I’m gonna explain to you what the intervention is and how and why the Czech National Bank started intervening their own currency. Foreign exchange interventions are transactions by which the central bank affects the domestic currency exchange rate. If the CNB sells the domestic currency and buys the Euro, it intervenes the domestic currency. If, on the other hand, the CNB purchases domestic currency and sells its foreign exchange reserves, it strengthens the domestic currency. The CNB wanted to boost economic growth, domestic consumption and exports by intervening so that the Czech crown would be of lower value. How is it done? Simply, you can print out enough local currency and start buying foreign currency. Because we live in the time of computers, the crowns do not have to be printed anymore, and it is all just computer-based accounting.