It needs a supporting monetary policy stance to be effective. We are left with the conclusion that foreign exchange market-sterilised intervention by itself has only a limited impact on exchange rates. This is underscored by the reported purchase by Japanese authorities of roughly $ billion against yen in April of last year that barely budged the dollar/yen exchange rate.
Hence, reserve assets do not expand, in a meaningful way, the set of macroeconomic policy tools that is available to policy makers in industrial countries. In addition, there is scant evidence that the rapid development of new financial instruments and products has undermined the liquidity, efficiency, or reliability of the market for major currencies.