Why wouldn’t it be?
This is not government debt, this is simply Central Bank balance sheet per capita (for every person in that country), and the numbers are staggering …
Continue reading “How much are Central Bank balance sheets per capita (or per person in a country)?”
Apparently, the European Central Bank (ECB) balance sheet was meant to shrink significantly in 2019. It has shrunk just 0.5% in 2019 until July 5th (as against 5% for the Federal Reserve in the same period).
At 4.67 trillion Euros (or around 41% of Euro area or Eurozone GDP), it doesn’t look like things are going to change quickly.
The Governing Council of the European Central Bank (ECB) expects the key ECB interest rates to remain at their present levels at least through the end of 2019.
The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility are 0.00%, 0.25% and -0.40% respectively and these rates are expected to remain in place at least until the end of 2019.
Sweden’s Central Bank, the Riksbank raised interest rates for the first time in seven years on Thursday which might cause further European monetary tightening. Riksbank’s benchmark repo rate was raised 25 bps from -0.5% earlier to -0.25%. It still remains negative though.
The European Central Bank (ECB) only started its Quantitative Easing (or QE) program in March 2015 in order to fight ultralow inflation in the Eurozone (also called the Euro Area). It somewhat worked by weakening the Euro (€), increasing exports, giving the stock market a boost and drastically lowering financing costs for European governments and corporations. This caused the ECB balance sheet to soar over €4.5 trillion or 45% of Eurozone GDP.
Central Banks have grown their balance sheets significantly in the past 20 years and almost exponentially since the 2008 financial crisis. Here’s how much the balance sheets of the Bank of Japan, the Swiss National Bank, the Federal Reserve and the European Central Bank have grown in the 21st century,
Total assets: 540.8036 trillion Yen (JPY) = 4.93 trillion US Dollars (USD)
As of date: May 1, 2018
Asset size as percentage of GDP: 101% of GDP
Interesting information: The Bank of Japan has a target to buy 6 trillion Yen ($54 billion) worth of exchange traded funds a year. It now holds almost 82% of all ETFs in Japan and is indirectly the largest shareholder in many large Japanese companies, almost about half of listed companies in Japan.
Interest Rates
What a difference a year makes. The Federal Reserve has hiked interest rates thrice (in December, March and June) with a target rate range of 1.75% to 2% now. The Eurozone meanwhile maintains its zero-interest rate policy.
The European Central Bank (ECB) announced on Wednesday that it will halve its bond buys to 15 billion Euros (from the current 30 billion Euros) a month from October then shut the programme at the end of the year.
ECB’s balance sheet has increased by 2 trillion Euros since 2015 when it announced its bond buying programme. 2-year yields for most of the Eurozone countries are currently negative and 10-year yields in most cases are lower than that of the United States. The European Central Bank (ECB) is by far the biggest holder of European bonds and the biggest (almost 90%) buyer of the weaker Eurozone (Italy, Spain, Portugal and Greece) countries debt since 2015. The ECB balance sheet is now over 4.5 trillion Euros, some 45% of Eurozone GDP.
Continue reading “This is what is likely to happen when the European Central Bank ends bond buying”
Central Banks have grown their balance sheet in the past 20 years and almost exponentially since the 2008 financial crisis
Bank of Japan
Total assets: 540.8036 trillion Yen (JPY) = 4.93 trillion US Dollars (USD)
As of date: May 1, 2018
Asset size as percentage of GDP: 101% of GDP