hat floating exchange rate would be too volatile. The solution chosen by some countries in this position is a crawling peg.Рreserve currencies:Рforeign exchange market intervention:Рsterilized intervention:If the authority does take action to prevent the domestic money supply from changing, then the authority is relying only on intervention to defend the fixed rate. This is called sterilized intervention.Рnon-sterilized intervention:If the authority instead allows the intervention to reduce the ary supply, then we have a clear interrelationship with two of the other defense methods. The change in the domestic money supply is likely to alter domestic interest rates, and these changes are likely to influence the entire macro-economy of the country. This is called non-sterilized intervention.
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