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Quantitative Easing

Quantitative Easing
Quantitative easing (QE) refers to large-scale asset purchases by the US Federal Reserve to inject liquidity in the world’s biggest economy after the onset of the global financial crisis in late 2008. In September 2012, stubbornly high US unemployment and faltering economic growth prompted it to launch QE3, under which it planned to buy US$40 billion worth of bonds per month, with no set end date. As of late 2012, it had bought some US$2.3 trillion in long-term securities. In December 2012 it announced it was increasing its purchases to US$85 billion a month.
People take photos by the bull statue in Shanghai, on August 7. Photo: EPA
Banking & finance

Macroscope | Inflated asset prices show markets don’t always know best

With hyperinflated sectors across multiple asset markets, the next crash could be so severe that it prompts a restructuring of global finance.

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Banking & finance

As China’s central bank projects confidence, are rate cuts on the back burner?

China's economic recovery

Explainer | China’s 100-billion-yuan question: does government bond purchase shift policy?

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China's economic recovery

China must act to avoid crisis, former Japanese central banker warns

Former central bank governors have raised the alarm over deflation and slowdown, both of which were symptoms in Japan’s ‘lost decades’.

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Haruhiko Kuroda, former governor of the Bank of Japan, is among the voices cautioning China over its deflation and low consumer confidence. Photo: Bloomberg
Banking & finance

Explainer | What 3 changes has China’s central bank made amid monetary policy reshuffle?

China’s central bank has conducted at least three large monetary adjustments since Pan Gongsheng was named People’s Bank of China governor in July 2023.

China economy

Opinion | A US$1 trillion property bailout is the last thing China’s economy needs

Stimulus right after a deflated bubble risks a debt mire. Better to invest in China’s green tech and harness global talent to ensure prosperity.

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Japan

The View | Japan stock rally peters out as investors wake up to another lost decade

Japan has squandered its chances to properly raise interest rates, abandon the weak yen policy and put strong reforms in place.

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A woman walks past a currency exchange shop in central Tokyo on June 30, after the yen slid to its weakest value against the US dollar since 1986. It’s time to end the weak-yen policy, which has over the years deadened the urgency for Tokyo to raise its economic game and increase competitiveness. Photo: AFP
China economy

The View | How China’s slowdown is shaking up Asia’s economic calculus

China’s struggles are injecting uncertainty into its neighbours and forcing reassessments when the geopolitical scene is already strained.

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China's economic recovery

PBOC says treasury bond purchases coming, but don’t call it quantitative easing

Amid calls for greater economic support, China’s central bank governor says at Lujiazui Forum that the policy toolbox will not include any drastic moves.

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Banking & finance

China must ‘liberate’ mind with primary market bond purchases by central bank

China’s central bank is set to participate in treasury-bond trading in the secondary market, and a prominent researcher affiliated with the Ministry of Finance says purchases in the primary market should also be made.

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In April, the Ministry of Finance and People’s Bank of China said in separate statements that the treasury bond trade could be used. Photo: EPA-EFE
Banking & finance

China’s central bank treasury-bond trade restart is ‘now certain’ amid talks

State media article on Wednesday says it is ‘certain’ that China’s central bank will participate in treasury bond trading amid better coordination with the finance ministry.

An instruction by President Xi Jinping that was only made public in March had fuelled speculation over an aggressive easing of monetary policy. Photo: EPA-EFE
Banking & finance

China’s central bank drops hints at bond trades, raising odds of direct action

The People’s Bank of China has indicated its approval for trading treasury bonds on the secondary market, signalling more robust action to boost liquidity and fuel growth is no longer out of the question.

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China economy

China’s central bank ‘cautious’ in bond trade, even with mandate from Xi

Even after President Xi Jinping has asked for China’s central bank to trade government bonds, the outcome is likely to remain limited as the bank does not want to trigger negative outcomes for inflation and exchange rates.

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Banking & finance

China’s monetary mix more ‘effective’, economy-focused than West’s easing policy

Senior central bank official says China’s monetary policies are ‘effective and obvious when compared with foreign central banks’.

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Calls are increasing calls for stronger policy support to achieve China’s “around 5 per cent” economic growth target for this year. Photo: AP
Japan

The View | Japan’s split-screen economy: roaring stocks and shrinking GDP

The Japanese economy is a study in contrasts, with a roaring stock market and record corporate profits set against stagnant wages and shrinking GDP. Decades of prioritising a weak yen over structural reform have deadened Japan’s animal spirits and hurt its attractiveness as an investment destination.

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Store owner Hiromichi Akiba works at his supermarket in Tokyo on February 16. While swelling corporate coffers are enriching global investors. Japanese workers face stagnant wages. Photo: Reuters
Banking & finance

The View | Why Japan letting yen weaken risks stirring up global hornet’s best

Stand-offs between Japan and currency traders over a weak yen are nothing new, but the stakes now are higher than ever and have global implications. If Tokyo policymakers aren’t careful, their dithering could spark devaluations across Asia and a backlash from US politicians struck with election fever.

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Banking & finance

Opinion | The dollar super bubble may finally be popped – by the Israel-Gaza war

The effects of war and inflation could send US financial markets into a tailspin, forcing China to completely ‘unpeg’ from the dollar – which could then collapse.

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Japan

The View | What if it’s Tokyo, not Beijing, that has most to learn from ‘Japanification’?

For all the talk of China’s urgent need to take action to avoid Japan-like lost decades, Japan itself should take heed of lessons from the past 25 years. Both Tokyo and Beijing must boldly undertake reforms, encourage consumption over saving and tackle inefficiencies to weed out ‘zombie’ companies and sectors.

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Drivers fuel their cars at a petrol station in Tokyo on September 22. Japan has, for decades, suffered timid investment trends, sluggish income growth and a dearth of risk-taking. Photo: EPA-EFE
China's economic recovery

Explainer | What tools did Beijing use to defuse China’s past financial crises?

From intentionally setting up ‘bad banks’ in the ’90s to more recent bank takeovers, Beijing has a history of reaching into its deep bag of policy tools to make economic repairs.

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China economy

The View | Will Beijing bring out the ‘big bazooka’? I would bet on it

Chinese leaders are wary of worsening the economy’s structural imbalance, but if light-touch measures continue to fail to lift business and consumer confidence, it could be only a matter of time before they take firmer action.

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China's economic recovery

As China’s household debt creeps upward, IMF’s warning line looms

Excessive levels of indebtedness and slow income growth among Chinese residents are constraining consumption, but for now China’s Politburo is relying more on domestic demand to fuel national growth.

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China intends to loosen restrictions on property sales to improve consumption and bolster the economy. Photo: AFP
China economy

Editorial | Confidence central to lifting China economy out of the doldrums

Mixed signals provide an opportunity for some stimulus when stability is paramount, but concerns of consumers must be allayed.

An engineer checks a laser cutting machine, used to make new energy vehicles, in Wuhan, in China’s central Hubei province. Beijing must get in front of sagging confidence to pull the nation’s economy out of its slump. Photo: AFP
Banking & finance

Opinion | Weaponising US dollar risks setting global economy on fire

When global finance is used to punish political adversaries and economic competitors rather than promote growth, it undermines a global public good. For the US too, a powerful currency is also a double-edged sword.

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Banking & finance

Macroscope | No repeat of the 2008 global financial crisis but other dangers lurk

In the US, large banks remain safe but there is little political appetite to throw fiscal support at the smaller, failing banks. In Europe, the shock that Credit Suisse’s AT1 bondholders were made to absorb losses first, continues to reverberate.

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Banking & finance

Macroscope | We need a better financial system so bankers can’t go on crashing it

Outside China, banking and finance often seem more of a black box than is healthy for the system. We need a better design for the benefit of many, not bonuses for the few.

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A masked protester at a protest in Rome on October 15, 2011, against the greed of bankers, in what was the worst violence of worldwide demonstrations against corporate greed in the aftermath of the global financial crisis. Photo: AFP
Banking & finance

Macroscope | As US banking stress rises, here’s what investors should be looking at

The Fed’s mopping up of market liquidity has put stress on banks. While the tightening is set to end, market concerns remain. Investors can gauge temperatures by tracking bank deposit shifts and indicators such as the FRA-OIS spread and US Conference Board’s leading credit index

A rate announcement on a screen as traders work on the floor of the New York Stock Exchange on March 22. Markets expect rates to drop after a final increase in May but inflation, jobs and economic data may well force the Fed to tighten credit further. Photo: AP
Silicon Valley Bank (SVB)

Opinion | With SVB bailout, US is spending its way out of a bind again

Expect more banking and bond fund blow-ups with the US reluctant to stop the endemic moral hazard in its financial system, preferring to lean on the dollar.

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US Federal Reserve

Macroscope | Chinese investors are backing off US assets as storm clouds gather

Investors are taking their cue from the US Federal Reserve as it tries to reduce its holdings of US government debt. However, there are no signs investors are rushing to the exits on US assets; they are merely adjusting risk preferences ahead of what is likely to be a difficult few months.

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