![]() ![]() The expansion of balance sheets is unprecedented. In recent years, the typical central bank has combined the asset growth and asset-liability mismatches of the Silicon Valley Bank with the leverage of Lehman Brothers and the balance-sheet opacity of Enron. ![]() Besides, losses erode both the credibility and independence of monetary authorities, making it harder for them to fulfill their inflation-fighting mandate. Recent research, however, finds that financial crises are more likely to occur after periods when their balance sheets have massively expanded. That’s not a problem, we’re told, since central banks are not bound by ordinary accounting rules. ![]() After interest rates started rising last year, several of those institutions have reported losses. LONDON, May 26 (Reuters Breakingviews) - Central banks’ balance sheets have exploded in size since 2008. ![]()
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