The $19 Trillion Bond Question Confronting Central Banks

The central bank liquidity hose.
The central bank liquidity hose. Photographer: David Sepeau/AFP via Getty Images
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Takeaways by Bloomberg AI

We all care about the interest rates that central banks set, but what about the $19 trillion of bonds and other assets1held by the biggest among them? Those constitute a more esoteric, but equally consequential, element of monetary policy that’s lately transcended the wonky to become politically fractious. Supporters credit bond purchase programs with stimulating the economy in times of need by lowering longer-term borrowing costs and tamping down market disruptions. Opponents blame them for widening inequality, among other things.

What becomes of these bonds is an issue of critical importance to governments, businesses and households because they influence the cost of money. And because detractors say they are a big reason why trust in central banks has tumbled.

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