Why do central bank intervene secretly? Preliminary evidence from the BoJ

This paper empirically investigates the main determinants of secret interventions in the foreign exchange
(FX) market. Using the recent experience of the Bank of Japan, we estimate a model that explains the share
of secret to reported interventions in the FX market. Two sets of determinants are clearly identified: the
first is related to the probability of detection of the central bank orders by market participants; the second
to the central bank’s internal decision to opt for secrecy. Our estimations support the arguments of current
microstructure theories that rationalize the use of secret interventions.