01756cas a2200241 a 4500 AALejournalIMF003114 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451875171 1018-5941 BD-DhAAL BD-DhAAL Christensen, Jakob. Capital Inflows, Sterilization, and Commercial Bank Speculation : The Case of the Czech Republic in the Mid-1990's / Jakob Christensen. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper analyzes the relationship between large-scale capital inflows and sterilization efforts in the Czech Republic during 1993-96 using a vector autoregression (VAR) model, which consists of domestic credit, foreign reserves, and domestic and foreign interest rates. The analysis finds that despite initial success in sterilizing capital inflows, this strategy proved increasingly costly and ultimately unsustainable as domestic interest rates attracted more capital inflows. The commercial banks exploited a profitable sterilization game, whereby they borrowed cheaply abroad and invested the funds domestically in high-yielding sterilization bonds. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2004/218 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/218/001.2004.issue-218-en.xml IMF e-Library