Of all the noise around central banks. this blog just likes the discussions around central bank balance sheets. Learning about central bank balance sheets is perhaps all there is to monetary policy. But again it is hardly emphasised enough.
Daniel Gros has a superb piece on how negative rates have impacted ECB balance sheet. Things have turned upside down actually. Traditionally central banks issue liabilities at near zerocost and earn on its assets which is usually investment in government bonds. With negative rates, ECB earns on its liabilities and distributes its earnings across the Eurozone via the national central banks. ECB has become more like an investment bank which uses leverage to earn interest on its assets.
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