[Post 1 of 2] Article: “The Central Bank of Iraq lists the reasons for the decline in foreign exchange reserves” Quote “…Central banks resort to withdrawing cash liquidity from the market through enhanced cash sterilization operations as part of its efforts to maintain monetary stability. The central bank emphasized that despite the decline it still possesses large net foreign reserves relative to the money supply which is relatively secure according to international financial standards.” They’re saying they’ve got it covered and what they’re doing is using what they call ‘sterilization’.
[Post 2 of 2] Research Quote: “Enhanced currency sterilization refers to…intervening in the foreign market and exchange markets to influence the value of its currency. It takes steps to offset the impact in the domestic money supply…sterilizing the interventions effect on the monetary base…Central banks often intervene in the foreign exchange market to manage their currency value, either to prevent appreciation or depreciation…If a central bank buys foreign currency, it releases its own currency into the domestic market, increasing the money supply.” That’s not a good thing. That’s not what they’re doing. Conversely, Quote: “Selling foreign currencies reduce the money supply.” That very well could be what they’re doing. We’ll see.
