Intervention Definition

The act of intervening.

The systematic process of assessment and planning employed to remediate or prevent a social, educational, or developmental problem.

Any interference in the affairs of others, esp. by one country in the affairs of another.

An act that alters the course of a disease, injury, or condition by initiating a treatment or performing a procedure or surgery.

An organized confronting of a person who has a serious problem, as an addiction to drugs or alcohol, by friends and family assembled to urge rehabilitation, etc.

When a government or central bank buys or sells a currency in the foreign exchange market in order to increase or decrease its relative value to other currencies. Intervention policies vary widely, with some countries, such as Japan, being more active in the foreign exchange market, and others, such as the U.S., being in the foreign exchange market less frequently. Historically, the U.S. actively intervened in the foreign exchange market in order to affect foreign exchange policy, but since approximately 1990, the general approach has been to let market forces determine the direction of currencies. However, if the U.S. believes that one currency is too strong or weak relative to others, it may intervene. Also, sometimes a foreign government will ask the U.S. to help it either strengthen or weaken its currency through intervention. When the U.S. does decide to intervene, the Department of the Treasury and the Federal Reserve work together. Typically, the Department of the Treasury decides when to intervene, while the intervention is carried out by the foreign exchange desk of the Federal Reserve Bank of New York. Intervention usually is paid for evenly between the Treasury’s Exchange Stabilization Fund and the Federal Reserve’s System Open Market Account. Such interventions are typically sterilized, which means that the expansion or contraction in the monetary supply that resulted from the intervention is offset by the Federal Reserve’s domestic monetary actions.