Our whole approach to foreign exchange intervention is based on our view that the foreign exchange market is not “efficient” in the academic sense, but that it is prone to overshooting in both directions from time to time. In other words, we do not have an idealised view of how deregulated asset markets behave - we have a realistic “warts and all” view.
After all, investors are required to sign a form that tells their broker about their risk tolerance before they buy a stock. Surely then, the company issuing that stock should be able to give those investors some honest disclosure of their assessment of the risks involved in that investment. The fallout from Enron has prompted debate about the need for tougher financial market rules.