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Central Bank’s Balance Sheet and the Rise of Reserves

Balance Sheet of four major Central Banks 2005-2015

The above figure shows the balance sheet of four major central banks from 2005 to 2015. Above the horizontal axis is the asset side of the balance sheet, below is the liability side. All four central banks financed their purchases via overnight interest-paying voluntarily-held deposit by financial institutions at the central bank, i.e. reserves.

Source: “Funding Quantitative Easing to Target Inflation” by Ricardo Reis

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Cloud Yip

Economics Correspondent and Editor of "Where is the General Theory of the 21st Century?"

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