Key points are not available for this paper at this time.
Iceland is an advanced economy pilot under the Integrated Policy Framework (IPF).The IPF helps assess the appropriate policy responses to shocks for economies vulnerable to capital flow volatility, allowing for some market frictions.Shallow FX markets is the main friction identified for Iceland under the IPF.An estimation of the Q-IPF model for Iceland suggests some benefits of foreign exchange intervention at times of stress, in line with the overall strategy pursued by the CBI.
A Mon, study studied this question.