Central banks around the world, including China’s, have shifted decisively into investing in equities as low interest rates have hit their revenues, according to a global study of 400 public sector institutions.
“A cluster of central banking investors has become major players on world equity markets,” says a report to be published this week by the Official Monetary and Financial Institutions Forum (Omfif), a central bank research and advisory group. The trend “could potentially contribute to overheated asset prices”, it warns.Across the Curve
Central Banks Plowing into Equities
John Jansen
2 comments:
This is relevant for the topic we were discussing here a couple of weeks ago: whether Central Banks could one day end up buying assets on a massive scale and in the process acquire a degree of direct control over the private sector.
Scott Sumner and his market monetarist pals will approve, no doubt. After all, MM advocates having the central bank print money and buy private assets in a recession.
Stuffing the pockets of the asset rich is just brilliant, particular if the recession was caused by a cut in spending by underwater households, as claimed by Mian and Sufi. MMT, in contrast, advocates distributing the new spending power more widely.
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