How much cash should be removed from the financial system?
Undoing quantitative easing provokes fierce debate
The world is still, in a sense, swimming in cash. Or at least the electronic equivalent: central-bank reserves. The Bank for International Settlements (BIS), a club of central banks, estimates that the balance-sheets of rich-country central banks amount to roughly 50% of collective GDP. That is down from 70% in 2021—a reduction which reflects quantitative tightening (QT), or the offloading of assets acquired while easing—but is still far above the pre-global-financial-crisis norm of around 10%.
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This article appeared in the Finance & economics section of the print edition under the headline “Break the safe”
Finance & economics July 6th 2024
From the July 6th 2024 edition
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