Central Bank of Iceland chief warns of foreign exchange intervention risks

gudmundsson

The governor of the Central Bank of Iceland, Már Guðmundsson, on July 14 highlighted risks posed by the deviation of the exchange rate from the level implied by economic fundamentals, but suggested that policy responses to this problem could fragment the financial system.

Speaking at a conference on fragmentation in the global economy in Turkey, Guðmundsson said: "The exchange rate often seems to be as much a source of shocks and instability as a tool for adjustment and stabilisation."

He argued

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