VT - Bloated Central Bank Balance Sheets

• There are good reasons to believe that there will be no return to the pre-QE configuration of balance sheets.
• First, the increasing global financial integration in the last few decades has imposed increasing challenges in terms of making liquidity management effective as cross-border volumes of capital flows have expanded.
• Second, changes to financial regulation have induced private agents to alter their behavior and strategies.
• Finally, a new task has come under the purview of central banks: monitoring relationships between various benchmark curves - i.e., operating as quasi-market makers.

For further details see: