Central Banks Worry About Engaging World Markets After ‘Brexit’
But, as the world’s leading central bankers finished a weekend of brainstorming in Basel, Switzerland, as to what their next move might be, some feared that this time around they might do more harm than good.
.. Global central bankers had already planned to convene at the annual meeting of the Bank for International Settlements, a clearinghouse and research shop that provides a private forum for central bankers to gather and exchange views.
But the British referendum results and the sharp fall in the markets that followed brought an extra urgency to the two-day meeting.
.. Playing a central role were exchange-traded funds, which at one point on Friday accounted for close to 50 percent of overall trading volume in stocks. That is an extraordinary statistic, given that the funds were largely unknown a decade ago as an investment option for investors.
The ability for investors to quickly and successfully buy and sell stocks and bonds, the crucial advantage that exchange-traded funds have over mutual funds, is seen by regulators as critical in times of acute financial stress.
.. Mr. Jen, the hedge fund manager, scoffed at the notion that the extraordinary central bank interventions of recent years were designed to stamp out deflationary threats and spark an increase in prices and economic activity in stagnant economies in Europe and Japan.
“We have plenty of inflation, it’s just asset price inflation,” he argued, referring to elevated equity, bond and housing markets that have been one consequence of these policies. “People can’t live in cities anymore, and they are grumpy about their jobs.”
.. Persistent central bank interventions have not only created dangerous distortions, they have added to a sense of worldwide cynicism that these measures have not accomplished their central aims: lifting economic growth and increasing wages.