Italy & Spain Main Users First LTRO

This graph from a BIS report (European bank funding and deleveraging) shows on the left for which amount in billion euro's banks of the countries in the Euro Zone have used the first 'Longer Term Refinancing Operation' 3 year loans of the European Central Bank. 

The second graph shows how the banks have changed their holdings of government debt in the three months after the LTRO. It seems Italy and Spain have used the LTRO money partly to buy government debt. As seen by the large decrease in the interest rates of the government bonds of these two countries in the given period it is most likely the bonds that the banks bought were Spanish and Italian.

Largest Central Bank Balance Sheets Combined

The first chart shows the size of the four central banks with the biggest balance sheets. In decreasing order: PBoC (Chinese Central Bank), ECB (European Central Bank), Fed (Federal Reserve, USA) and the BoJ (Bank of Japan). 

So the Chinese Central Bank has the largest balance sheet of the central banks in the world!

The next four central banks of the top eight with the largest balance sheets in the world are the Bundesbank (Germany), Banque de France, BoE (Bank of England) and the SNB (Swiss National Bank).

In this last graph you can see the balance sheets of the eight central banks combined. Especially after the fall of Lehman balance sheets increased dramatically. This was also the case, although more gradually since the end of 2010 during the still ongoing Euro crisis.

The Big Picture

Bailout & Stimulus In The World During The Financial Crisis

This infograph shows the sizes of the bailouts and the stimulus (up until the end of 2009) in the world. The grey circles picture the size of the economy of the country in 2008 in dollars. Inside the circle the red part shows the bailout costs as a percentage of GDP and the blue part shows the stimulus amounts as a percentage of GDP.

The Big Picture

Central Bank Balance Sheets (ECB, Fed, BoJ, BoE)

In this post I will show how the main Central Bank balance sheets have grown in the last few years.

First a graph with the assets as a percentage of GDP for the Federal Reserve (U.S.), The European Central Bank, The Bank of England and the Bank of Japan. You can see that especially the assets of the UK and the US central banks have exploded during the financial crisis in the second half of 2008. The balance sheet of the ECB didn't grow as fast but is growing fast at the moment.

The increase in the balance sheets reflect more flexible lending standards by the central banks to the public banks. With the credit markets drying up at the moment (as in 2008) banks more and more stop lending to and from each other and start storing its excess money at the central bank as well as lending from it.

The extra loans given out by the central banks show up as an increase in the central banks balance sheets.

This chart shows the balance sheet of the European Central Bank in trillion euro's. Ofcourse the above picture gives a better comparison as the balance sheets are expressed as percentages of the countries GDP.

Interest Rates (global), Inflation (global) and Credit Growth (EuroZone)

World short term interest rates have been lowered drastically by the central banks.



This couldn't stop a dramatic fall in global inflation rates in 2008 and 2009. In 2010 and 2011 inflation rates started growing again, until recently.



Euro Zone Credit Growth. With the financial crisis, followed by the economic crisis (recession) and the sovereign debt crisis resulted in an almost stagnant credit growth in the Euro Zone.

Cumulative ECB Government Bond Purchases

This graph from the Wall Street Journal shows the cumulative bond purchases (this policy is called the securities markets programme) by the Earopean Central Bank of the PIIGS countries. In the last few weeks (Italy and Spain under pressure) the ECB has already bought more government bonds than in the first two months it started buying government bonds (Greece under pressure) in 2010.

Impact of QE on 10-year Treasury

Interesting graph with all the relevant dates of QE1 and QE2 in relating to the interest rate on 10 year treasuries.

Business Insider

Did QE Affect Stocks (S&P 500)

Graph with the S&P 500 between January 2008 and April 2011 with the main data of Quantitative Easing. Quantitative Easing is a policy of the Federal Reserve in which the National Bank bought United States Treasuries to bring interest rates down in other words to combat deflation and bring unemployment down. The current quantittative easing (i.e. QE2) will come to an end on July 1st 2011.

Calculated Risk

QE2 In Relation To Leading Indicators

Business Insider made four charts comparing Quantitative Easing 2 with unemployment, consumer credit, housing market and inflation expectations. During QE2 Unemployment, Consumer Credit and the Housing Market didn't improve under QE2. Inflation expectations on the other hand did improve.

Source: Business Insider

Did QE increase the Money Supply?

This graph shows that in the United States the relationship between the monetary base and the money supply breaks down during the crisis. In other words, QE barely rose the money supply.

Source: Business Insider

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Chinese Bank Reserve Requirements Vs. CPI

This picture I found via Lukas Daalder from the Wall Street Journal graphs the Reserve Requirements as set by the People's Bank of China (Central Bank) and the Inflation in China.

Source: Wall Street Journal