Money

Central banks becoming major investors in stock markets

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NASDAQ stock market displays at Times Square - Photo by bfishadow on Flickr

Some leading central banks have become major players on world equity markets in a development that could potentially contribute to overheated asset prices.

 

The buildup of central-banking interest in equities is one of the unexpected consequences of the last few years’ fall in interest rates, which has depressed the returns on central banks’ foreign exchange reserves and driven them to find alternative investment targets.

In the years since the financial crisis, central banks have leapt to the forefront of public policy making. They have taken responsibility for lowering interest rates, for maintaining stability of financial institutions, and for buying up government debt to help economies recover from recession.

Now it seems that they have become important in another area, too, in starting to build up holdings of equities.

(Read the rest of the story here…)

 

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