Why Central Banks Spend Billions Defending Their Currency

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jul 30, 2026 · 7m · transcript

In October 2022, the Bank of Japan spent roughly 70 billion dollars in a single day buying yen—a record intervention. But it barely moved the exchange rate. Why do central banks keep trying? This episode drills into the mechanics of currency intervention: sterilized vs. unsterilized, the balance sheet impact, and the track record. Lucas explains how intervention works in practice, using the Bank of Japan's playbook and comparing it to the Swiss National Bank's approach. Luna asks why the odds of success are so low—studies show sterilized intervention changes exchange rates only…