@techreport{NBERw16345,
 title = "U.S. Foreign-Exchange-Market Intervention during the Volcker-Greenspan Era",
 author = "Michael D. Bordo and Owen F. Humpage and Anna J. Schwartz",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "16345",
 year = "2010",
 month = "September",
 URL = "http://www.nber.org/papers/w16345",
 abstract = {The Federal Reserve abandoned foreign-exchange-market intervention because it conflicted with the System’s commitment to price stability.  By the early 1980s, economists generally concluded that, absent a portfolio-balance channel, sterilized foreign-exchange-market intervention did not provide central banks with a mechanism for systematically influencing exchange rates independent of their monetary policies.  If intervention were to have anything other than a fleeting, hit-or-miss, effect on exchange rates, monetary policy had to support it.  Exchange rates, however, often responded to U.S. monetary-policy initiatives, so intervention to offset or reverse those exchange-rate responses can seem a contrary policy move and can create uncertainty about the strength of the System’s commitment to price stability.  That the U.S. Treasury maintained primary responsibility for foreign-exchange intervention only compounded this uncertainty.  In addition, many FOMC participants feared that swap drawings and warehousing could contravene the Congressional appropriations process and, therefore, potentially pose a threat to System independence, a necessary condition for monetary-policy credibility.},
}