Global Economic Briefing: Central Bank Balance Sheets Yardeni Research, Inc.

September 8, 2017

Dr. Edward Yardeni 516-972-7683 [email protected]

Mali Quintana 480-664-1333 [email protected]

Please visit our sites at www.yardeni.com blog.yardeni.com

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Table Of Contents

Table Of Contents

Total Assets of Major Central Banks Fed Balance Sheet ECB Balance Sheet ECB & BOJ Balance Sheets PBOC US Treasuries & Agencies Held by Central Banks

September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

1-3 4 5 6 7 8

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Total Assets of Major Central Banks Figure 1. 6.0 5.5

6.0

TOTAL ASSETS OF MAJOR CENTRAL BANKS (trillion dollars)

5.5

5.0

5.0

Fed ( (Aug=4.4) ECB ( (Aug=5.1) BOJ ( (Aug=4.7)

4.5

4.5

Aug

4.0

4.0

3.5

3.5

3.0

3.0

2.5

2.5

2.0

2.0

1.5

1.5

1.0

1.0 yardeni.com

.5 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

.5

2018

Source: Haver Analytics.

Figure 2. 15

15

TOTAL ASSETS OF MAJOR CENTRAL BANKS (trillion dollars)

Aug

13

13

Total of Fed, ECB, BOJ (14.1)

11

11

9

9

7

7

5

5

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3 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

3

2018

Source: Haver Analytics.

Page 1 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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Total Assets of Major Central Banks Figure 3. 100

100

TOTAL ASSETS OF MAJOR CENTRAL BANKS (as a percent of local currency nominal GDP)

Q2

80

80

Fed (Q2=23.0) ECB (Q2=37.8) BOJ (Q2=92.2) 60

60

40

40

Q2

Q2 20

20

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0 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

0

2018

Source: Haver Analytics.

Page 2 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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Total Assets of Major Central Banks Figure 4. 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7

TOTAL ASSETS OF MAJOR CENTRAL BANKS (all in trillions of US dollars)

ECB

Aug

4.9

Jul

4.6 4.3

Total (5.1)

Total Assets* (19.0)

4.0 3.7 3.4 3.1 2.8 2.5 2.2

6

1.9 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

5.0

5.2

FED

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 5.7

PBOC

4.6

Aug

Jul

4.2 3.8

Total (5.2)

Total (4.4)

3.4

5.2 4.7 4.2

3.0 2.6

3.7

2.2 3.2

1.8 1.4

2.7

1.0 yardeni.com

.6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 4.8 4.6 4.4 4.2 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 .8

BOJ

2.2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 16

Aug

15 Aug

14 13

Total (4.7)

Total Excluding PBOC (14.1)

12 11 10 9 8 7 6 5 4 3

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

*Includes US, ECB, Bank of Japan, and PBOC. Source: Haver Analytics.

Page 3 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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Fed Balance Sheet Figure 5. 4.5 4.0

FED’S ASSETS*

9/6

(trillion dollars)

5.0

FED’S LIABILITIES* (trillion dollars)

9/6

4.5

3.5

4.0

3.0

3.5

2.5

3.0

2.0 1.5 1.0

US Treasuries + Agency Debt + MBS

2.5 2.0

Total

Liquidity Facilities

1.5

.5

1.0

.0

.5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2.7

3.0 9/6

2.4

2.7 9/6

2.1

2.4 2.1

1.8

1.8 1.5 1.5 1.2 1.2 .9 .6

US Treasury Securities

.9

Reserve Balances with Fed (Depository Institutions’ Deposits at Fed)

Agency Debt + MBS .3

.6 .3

.0

.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

.8

9/6

.6

.4

Central Bank Liquidity Swaps Other Loans

.2

Federal Reserve Notes .0

9/6

yardeni.com 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 *Average of daily figures for weeks ending Wednesdays. Source: Federal Reserve Board.

1.56 1.52 1.48 1.44 1.40 1.36 1.32 1.28 1.24 1.20 1.16 1.12 1.08 1.04 1.00 .96 .92 .88 .84 .80 .76

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Page 4 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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ECB Balance Sheet Figure 6. 4400 4000

9/1

TOTAL ASSETS (billion euros)

SELECTED LIABILITIES

9/1

(billion euros)

3600

Deposit Facility

Euro Area Credit Institutions in Euro

3200 2800

2000 1800 1600 1400 1200 1000 800

2400

600

2000

400

1600

200

1200

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 460

1350 1250

Liabilities to Other Euro Area Residents in Euro

Lending to Euro Area Credit Institutions in Euro

1150 1050

400 340 9/1

950

280

850 9/1

750

220

650

160

550

100

450 350

40 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

3000

1200

Securities of Euro Area Residents in Euro 2000

9/1 9/1

Bank Notes in Circulation

1000

General Govt Debt Denominated in Euro

1000

800

0

600 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

800

Foreign Reserves Including Gold

600

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1100

9/1

Miscellaneous Liabilities*

9/1

1000 900 800

400 700 200

Claims on Euro Area Residents in Foreign Currency

600 500 yardeni.com

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

400

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

* Total liabilities minus sum of lending to euro area credit institutions in euro, liabilities to other euro area residents in euro, and bank notes in circulation. Source: European Central Bank.

Page 5 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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ECB & BOJ Balance Sheets Figure 7. 2.8 2.5 2.2 1.9

ECB: HOLDINGS OF SECURITIES

2.8 2.5 2.2 1.9

9/1

(trillion euros, ratio scale)

1.6

1.6

1.3

1.3 D

Securities of Euro Area Residents in Euro

1.0

NIRP

QE

QEE

1.0

.7

.7

.4

.4

yardeni.com

.1 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

.1

2018

D = ECB President Mario Draghi pledged to do "whatever it takes" to defend the euro (7/26/12). NIRP = negative interest-rate policy (6/5/2014). QE (1/22/15). QEE = expansion and extension of QE (3/10/16, corporate bond purchases started 6/1/16). Source: European Central Bank.

Figure 8. 350

350

JAPAN: RESERVE BALANCES Z AT BOJ

Aug

(trillion yen, reserve adjusted)

300

250

250

200

150

yardeni.com

300

200

150

100

100

50

50

0

0 89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

Z = Zero Interest Rate Policy. Note: Blue shade is Quantitative Easing Policy. Source: Bank of Japan.

Page 6 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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PBOC Figure 9. 6.2 5.7 5.2 4.7 4.2 3.7 3.2

PBOC ASSETS

6.2 5.7 5.2 4.7 4.2 3.7 3.2

Jul

(trillion dollars, nsa, ratio scale)

2.7

2.7

2.2

2.2

1.7

1.7

1.2

1.2

.7

.7

Total Assets (5.2) Foreign Exchange Assets (3.2) Nongold International Reserves Held by China (IMF data) (3.1) yardeni.com

.2 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

.2

2018

Source: People’s Bank of China and IMF.

Figure 10. 85 80

85

PBOC ASSETS (percent)

80

Foreign Exchange Held/Total PBOC Assets

75

75

70

70

65

65 Jul

60

60

55

55

50

50

45

45

40

40

35

yardeni.com 2002

2003

35 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: People’s Bank of China and IMF.

Page 7 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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US Treasuries & Agencies Held by Central Banks Figure 11. 3400 3200

3400

US TREASURIES HELD BY FED & FOREIGN OFFICIAL ACCOUNTS (billion dollars)

3200 9/6

3000

3000

2800

2800

2600

Held by Fed

2600

2400

Foreign Official Dollar Reserves*

2400

2200

2200

2000

2000

1800

1800

1600

1600

1400

1400

1200

1200

1000

1000

800

800

600

600 yardeni.com

400 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

400

2018

* Held by foreign official institutions at the Fed. Average of week ending Wednesday. Source: Federal Reserve Board, Table H.4.1.

Figure 12. 2005

2005

US AGENCIES HELD BY FED & FOREIGN OFFICIAL ACCOUNTS (billion dollars)

Held by Fed (1786.2) 1505

1505

Foreign Official Dollar Reserves* (262.0)

1005

1005

505

505

8/23 yardeni.com

5 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

5

2018

* Held by foreign official institutions at the Fed. Average of week ending Wednesday. Source: Federal Reserve Board, Table H.4.1.

Page 8 / September 8, 2017 / Global Economic Briefing: Central Bank Balance Sheets

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