The transparency of the ECB policy: What can we learn from its foreign exchange market interventions?

In the fall of 2000, the European Central Bank (ECB) conducted several foreign exchange market interventions in order to reverse the depreciation trend of the euro. In this paper, we compare the actual information and communication policy of the ECB with the transparency requirements of major approaches explaining how interventions can affect the exchange rate. The analysis points to several inconsistencies which can be interpreted as reasons for the relative ineffectiveness of the ECB interventions.