A Study in Central Banks

As I’m over-fond of pointing out, the ECB hasn’t expanded its balance sheet materially since 2009, and every time it tries to lighten now it causes a crisis in Europe. First Greece, then Italy, etc.  With that in mind, the following graphic compares the balance sheets at the ECB (EBBS) and Federal Reserve banks (FARBAST) over the past year. Whatever your belief about what central banks should be doing right now, a study in contrasts of how a dynamic system responds to external forces.

Central banks