Capital Wars pp 101-140 | Cite as

The Central Banks: Don’t Fight the Fed, Don’t Upset the ECB and Don’t Mess with the PBoC

  • Michael J. Howell


The US Federal Reserve; the People’s Bank of China (PBoC) and, to a lesser extent, the European Central Bank (ECB), are the dominant global players. The US Federal Reserve and the ECB have recently seen monetary control badly shaken, whereas the PBoC’s liquidity multiplier has remained remarkably stable. The Federal Reserve operated through three channels following the 2007–2008 Global Financial Crisis (GFC)—liquidity provision, maturity transformation and credit enhancement. The policies of other Central Banks are less definitive. The PBoC still focuses on quantitative policies to provide liquidity, with their domestic monetary operations becoming far more important since the disruption to foreign exchange reserve accumulation in 2015. The ECB has struggled to maintain liquidity provision since the GFC and has lately been forced to focus increasingly more on credit enhancement policies.


Global Liquidity Central Banks Liquidity multiplier Federal Reserve People’s Bank of China ECB Shadow monetary base 


  1. Bagehot, Walter. 1873. Lombard Street. London: Henry S. King & Co.Google Scholar
  2. Brunnermeier, Markus K., and Yann Koby. 2019. The Reversal Interest Rate. Princeton Working Paper, January.Google Scholar
  3. Darmouni, Olivier M., and Alexander Rodnyansky. 2017. The Effects of Quantitative Easing on Bank Lending Behavior. The Review of Financial Studies 30 (11) (November): 3858–3887.Google Scholar
  4. Di Maggio, Marco, Amir Kermani, and Christopher J. Palmer. 2018. How Quantitative Easing Works: Evidence on the Refinancing Channel. MIT Working Paper, June.Google Scholar
  5. Harman, Jeremiah. 1819. Report from the Secret Committee of the Bank Resuming Cash Payments. Bank of England.Google Scholar
  6. Kaufman, Henry. 1986. Interest Rates, the Markets and New Financial World. Time Books.Google Scholar
  7. Krishnamurthy, Arvind, and Annette Vissing-Jorgensen. 2011. The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy. Brookings Papers.Google Scholar
  8. Krishnamurthy, Arvind, and Annette Vissing-Jorgensen. 2013. The Ins and Outs of LSAPs. Jackson Hole Economic Symposium.Google Scholar
  9. Singh, Manmohan. 2013. Collateral and Monetary Policy. IMF Working Paper No. 13/186, August.Google Scholar
  10. Stigum, Marcia L. 1987. Money Market, Rev. ed. New York: McGraw-Hill.Google Scholar
  11. Tooze, Adam. 2018. Crashed. London: Penguin.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  • Michael J. Howell
    • 1
  1. 1.CrossBorder Capital Ltd.LondonUK

Personalised recommendations