logo |

News

    Home   >     Industry    >     Main body

    World Bank chief calls on central banks to cut long-term bond holdings

    Abstract:World Bank President David Malpass said on Tuesday that central banks should reduce long-term bond holdings rather than shrinking short-term assets, as this would free up more bank capital for small business loans and could help tame inflation.
    GettyImages-1609463-f85f772752124035a99819af988365e1.jpg

      World Bank President David Malpass said on Tuesday that central banks should reduce long-term bond holdings rather than shrinking short-term assets, as this would free up more bank capital for small business loans and could help tame inflation.

      Malpass told a news conference that the central banks' amassing of massive balance sheets has crowded out capital available for small businesses.

      Malpass argued that the central banks have absorbed trillions of dollars of bank reserves to maintain long-term bond portfolios, allocating capital away from lending for small businesses and improvements to supply chains straining from the COVID-19 pandemic.

      “This shortage of working capital makes it hard to bring down the inflation rate,” he said, adding that interest rate hikes and tighter credit conditions also will add to financing pressures on small businesses.

      “We need robust small business loans to solve the supply problems. We've ended up with inflation.”

      He said central banks are responding by reducing total assets and increasing rates, but he is concerned that this will not tame inflation or reduce growing income inequality. But central banks in advanced countries should take a more balanced approach and shrink their long-term bond portfolios.

      Reducing short-term assets would just shuffle Treasury bills to other balance sheets, while reducing long-term assets would free up more bank reserves.

      Malpass also invoked comments from inflation-fighting former Fed Chairman Paul Volcker that asset prices and goods prices are closely linked.

      “It will be hard to stop inflation as long as there's permanent support for asset prices,” Malpass added.

      For more Forex news, please download WikiFX- the Global Forex Regulatory Inquiry APP.

    Read more

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    United States Dollar
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click 'Complaints 'and 'Correction' to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.