Lewis (1988) proposes a multi-lateral approach to portfolio balance modelling where authorities could target the exchange rate by swapping the currency denomination of outside debt held by private investors while leaving the money supply unchanged. This is a kind of sterilised intervention in the foreign exchange market but it is achieved via a different, and probably a more convenient, means Cadsby (1987) considers a two-country portfolio balance model similar to the cases demonstrated in Section 3 of this chapter. The question of Walrasian stability is pondered, and conditions and assumptions under which stability is guaran