The Czech National Bank's exchange-rate floor against deflation

When its main policy rate fell to technically zero in late 2012, the Czech National Bank judged conventional easing exhausted even though inflation was running persistently below its 2% target and the economy still bore scars from the 2008-09 slump and the 2012 recession tied to the eurozone debt crisis. On November 7, 2013, the CNB announced a one-sided commitment to prevent the koruna from strengthening past 27 per euro, using the exchange rate itself as an additional easing tool to push up import prices and inflation expectations. The bank declared it stood ready to intervene in unlimited volume and for an unspecified duration, a pledge credible enough that outright intervention was rarely needed until mid-2015, when ECB quantitative easing and a strengthening domestic recovery pushed the koruna toward the floor and the CNB began buying euros in large volume. By the time the commitment was discontinued on April 6, 2017, interventions had accumulated to roughly EUR 75 billion, swelling foreign reserves and leaving a large stock of short-term foreign capital in the banking system that had to be unwound gradually after the floor's exit.