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According to Paul Donovan, Global Chief Economist at UBS, central banks are slowly changing quantitative policy as they are cutting cash supply.

Key Quotes

“It would be a very big mistake to focus on cash supply alone. Cash demand matters just as much.”

“Central banks are likely to reduce cash supply as cash demand falls. This means that the liquidity available to financial markets need not change as central banks change policy.”

“The problem for investors is that there is no simple measure of cash demand. Whether cash supply and cash demand are in balance is a complicated judgment.”