Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention

Policy Papers, December 21, 2023

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Canonical URL: Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention

Guides policy advice on the use of foreign exchange intervention (FXI) as part of the Integrated Policy Framework (IPF) in Fund surveillance.
Provides general principles for advice in countries with flexible exchange rates.
Sets out three use cases for FXI that are tied to specific frictions.
Explores the use of FXI as part of an overall policy response, allowing advice to differ with shocks, frictions, and country-specific circumstances.

FXI role within IPF:
- FXI is framed as an instrument that should be considered alongside other policy tools under the IPF.
- Emphasis on tailoring FXI advice to country-specific shocks and frictions.
Principles for advice in flexible exchange rate regimes:
- General principles are provided for how Fund staff should advise countries with flexible exchange rates on FXI.
Use cases:
- The note identifies three use cases for FXI, each tied to specific IPF frictions (the note itself specifies three use cases but does not enumerate them on this page).
Interaction with other policies:
- FXI is discussed as part of an overall policy response, implying coordination with monetary policy, macroprudential policy, and other relevant measures.

Subject: Currency markets, Exchange rate adjustments, Exchange rates, Financial markets, Foreign exchange, Inflation, Monetary policy, Political economy, Prices
Keywords: Capital flows, Currency markets, Exchange rate adjustments, Exchange rates, Foreign exchange intervention, FX mismatch, Global, Inflation, Integrated Policy Framework, IPF friction, IPF policy, Macroprudential Policy, Monetary Policy, policy discussion, staff advice