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.”
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