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"For countries with fixed exchange rates, payments deficits would be self-correcting, if only governments would stop...

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Finance

"For countries with fixed exchange rates, payments deficitswould be self-correcting, if only governments would stop doingtheir darnedest to prevent correction." Comment, and include howcounterbalancing monetary policy (sterilization) can preventself-adjustment from occurring.

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In those situations in which there is a payment deficit the central bank of a country will come into picture and will intervene to control the payment deficit situation by buying domestic currency and by selling the foreign currency This will be done by the central bank so as to be    See Answer
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"For countries with fixed exchange rates, payments deficitswould be self-correcting, if only governments would stop doingtheir darnedest to prevent correction." Comment, and include howcounterbalancing monetary policy (sterilization) can preventself-adjustment from occurring.

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