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TS Lombard with the note:
- Central banks are now making losses, following a decade of highly profitable QE
- While losses do not interfere with monetary policy, they are politically problematic
- The main implications are fiscal, but officials will fear for their independence
Summary:
Central banks are suddenly making large losses, fuelling talk that they are “insolvent”. But these institutions cannot go bankrupt and good monetary policy is not a matter of turning a profit.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.