Balance sheet whack-a-mole
For example, in a 2012 blog entry (Delicate balance) you wrote: "Take first the issue of U.S.–China bilateral flows of trade and capital. The net flows can be described easily: China runs an export surplus, and its central bank, wishing to prevent appreciation, absorbs the resulting net capital flows." How would they go about doing this? What is the "plumbing" mechanism?
Let me try to clear my question, it seems a little loose. I'm writing from Brazil, where exchange rates were fixed in the past but now works in an administered band regime. I'm interested in understanding the nuts and bolts of administering an fixed exchange rate and also the current administered bands regime. Can you point me to some articles using the same money view and balance sheets where I can get a deeper understanting?
Could you expand on this topic a little bit: "So rather than exerting pressure on the exchange rate as intended, the interventions leak out onto other balance sheets."? I cannot see how come the interventions leak to others balance sheets.