Governments can stop their currency from crashing just by asking banks for a "price check" without spending a single cent.
SSRN · March 18, 2026 · 6322238
The Takeaway
A simple 'coordinated rate check'—where the central bank merely asks for price quotes—was found to be just as effective at stopping currency depreciation as spending billions of dollars in actual trades. This suggests the psychological threat of a government intervention is just as powerful as the intervention itself.
From the abstract
<p>This paper evaluates the effectiveness of the unprecedented Japan-US coordinated rate check (CRC) conducted on January 23, 2026, as a preparatory action toward implementing foreign exchange (FX) intervention. We first estimate the lasting effect of the CRC using our methodology based on synthetic control methods. We find that the effect of the CRC significantly lasted for 7 business days after the end of the CRC. We then compare the CRC with the four FX intervention events in 2022-24. We find