Central banks’ assets are too damn high!

From 2009 until the end of last year, net asset purchases by major central banks — the US Federal Reserve (FED), European Central Bank (ECB), Bank of England (BoE), and Bank of Japan (BoJ) — totalled about $20 trillion. That figure must come down. The big question is how far, and how fast. Following the financial crisis, central banks hoovered up bonds as part of quantitative easing programmes to stimulate demand-sapped economies. Then the pandemic hit, leading to a further bond-buying binge to calm markets. Central banks (with the exception of the BoJ) have been slimming their balance sheets this year via quantitative tightening. Still, the Fed’s total asset holdings amount are equivalent to about 30 per cent of the US economy and the ECB’s, more than half the eurozone’s gross domestic product.

Jimmy McMillan, New York Gubernatorial debate, 18.10.2010
ft.com, Tej Parikh, 16.11.2023