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Metamorphoses of leading central banks

Metamorphoses of leading central banks

Leading central banks of the world, to justify the runaway money issue, refer to "pandemic", but this is a smoke screen

The other day, another review "Central Banks: balances on a monthly basis " (Central Banks: Monthly Balance Sheets), prepared by an advisory company Yardeni Research, Inc. These surveys contain data on the assets of the four leading central banks in the world - the US Federal Reserve, European Central Bank (ECB), Bank of Japan and People's Bank of China (NSC). Reviews are being prepared with 2007 years on a monthly basis, in this release - data as of the end of February 2021 of the year.

It is also interesting to get acquainted with the picture of the assets of central banks today., and see the dynamics of changes in the indicator of assets for less than a quarter of a century (tab. 1).

Table. 1.

Assets of leading central banks (trillion. Doll.)

Name CB

End assets 2007 g.

Assets at the end of February 2021 g.

Growth in asset value (time)

US Federal Reserve

0,8

7,6

9,50

ECB

1,9

8,6

4,53

Bank of Japan

1,0

6,8

6,80

NSC

2,3

5,9

2,57

in total

6,0

28,8

4,80

For all four central banks, over the specified period of time, there was an increase in assets in 4,8 fold. Consequently, at 4,8 times increased liabilities (commitments) big four central banks. As is known, the bulk of liabilities (commitments) The Central Bank is money issued by central banks (in the form of cash and deposits, on which commercial banks place their funds). So we can't go wrong, if we say, what money supply, issued by four banks in less than a quarter of a century, also increased in 4,8 fold.

For reference: according to World Bank estimates, world GDP in 2007 year in current prices was 58,22 trillion. Doll. According to the results 2020 year, its value was measured by the sum 83,84 trillion. Doll. That is, in 2007-2020 gg. world GDP increased by 1,44 fold. it, remark, at current prices. And at constant prices (adjusted for inflation) GDP growth was even more modest. And against this background - an almost fivefold increase in the money supply, produced by the "big four" central banks.

The Fed especially distinguished itself, which began to sharply increase money supply in the midst of the financial crisis 2008-2009 gg. This was done under the flag of "quantitative easing" (K S). There were three KS programs, the latter ended in 2014 year. However, when the US declared a "pandemic" and began to impose quarantine restrictions, the Fed printing press was brought up to full capacity again. Now the Fed buys monthly on the securities market for 120 billion. Doll. (on 80 billion. Doll. - US Treasuries and another 80 billion. Doll. - mortgage securities). Respectively, the dollar mass increases by the same amount every month.

In second place in terms of asset growth rates (and money supply) the Bank of Japan is located. He started building up assets and money supply earlier than other leading central banks, from the end of the XX - beginning of the XXI century.

AT 2007 year in the "big four" in terms of assets, the first place was occupied by the Chinese Central Bank, and the Federal Reserve was in fourth place. At that time, the US monetary authorities were still pursuing a very tight monetary policy., suppressing any attempts to increase the output of the printing press. Today the picture is different: the ECB came out on top in terms of assets. Followed by the US Federal Reserve and the Bank of Japan. And the NBK was in fourth place. During the period under review, the Central Bank of China showed the greatest restraint in increasing its assets (they grew up in 2,57 fold).

The review also provides the relative values ​​of the Central Bank's assets - their value in relation to GDP. At the end 2007 g. the highest relative level of assets had the Chinese central bank, and the lowest is the US Federal Reserve.

Table. 2.

Assets of leading central banks (% VVP)

Name CB

End assets 2007 g.

Assets at the end of February 2021 g.

US Federal Reserve

6

33,4

ECB

12

59,5

Bank of Japan

21

127,4

NSC

53

35,1

At the end of February 2021 g. the picture has changed radically. We see a meteoric rise in the value of the indicator at the Bank of Japan, on the edge 2018-2019 gg. he crossed the bar in 100%. Now his assets are equal 127,4% VVP. The indicators of the relative level of assets of the Fed and the ECB have grown significantly. But the Central Bank of China has reduced the relative value of its assets by about a third. This is also the result of curbing the activity of the Chinese Central Bank and that, that China has experienced high GDP growth rates.

AT 2001 year, about half of all assets of the NBK accounted for gold and foreign exchange reserves. By the middle of the second decade of the XXI century, the share of gold and foreign exchange reserves rose in this bank to maximum values ​​of about 85%. But at the end of February 2021 years, gold and foreign exchange reserves accounted for 56%, for purely currency (without gold) – 54%. This change in the structure of assets indicates that, that China's monetary authorities are trying to reorient the Central Bank to the domestic market, the share of loans and securities in yuan in assets is increasing.

As for the other three leading central banks, their course towards increasing money supply will remain. Head of the US Federal Reserve Jerome Powell makes it clear, that the American Central Bank, at least until the end of the year, will continue to buy securities in the same volumes (t. it is. by 120 billion. Doll. monthly).

ECB President Christine Lagarde announced in March, that the bank will accelerate asset repurchases in the coming months under the emergency PEPP program (Pandemic Emergency Purchase Programme). The scope of this program is 1,85 trillion euros. Besides, that the main ECB repurchase program continues.

19 a meeting of the Board of Directors of the Bank of Japan was held in March. It was decided to extend the additional buyout of commercial papers (CP) and corporate bonds until the end of September 2021 of the year. (the volume of the redemption is determined in 20 trillion yen). The Bank of Japan also retained the annual volume of exchange-traded fund buybacks (ETF) at about 12 trillion yen and assets of real estate investment trusts (J-REIT) - about 180 billion yen.

Other central banks are also pursuing a course to build up assets, which are not included in the review Yardeni Research, Inc. Among them, the Bank of England and the Swiss National Bank should be highlighted. (НБШ). So, Bank of England at its regular meeting 18 March made a decision to maintain the volume of asset repurchases from the market at the level 895 billion pounds. The redemption of government bonds is 875 billion pounds, the volume of redemption of corporate bonds remained at the level 20 billion pounds.

As for the NBS, then he buys not only securities of Swiss issuers, but also securities of foreigners, including American corporations.

Leading central banks of the world, to justify the runaway money issue, refer to "pandemic", but this is a smoke screen. Undeclared currency war waged, the competition of printing presses unfolded. The more money supply will be created, the more likely, that this currency will have a lower rate in relation to the competitor's currency. And the undervalued exchange rate of the national currency is a means of strengthening the international competitiveness of national business. However, such competition (currency war) could lead to the collapse of the currencies of competing central banks.

A photo: coinnounce.com

Valentin KATASONOV

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