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How independent are central banks?

September 16, 2021

reading time: 3 minutes

by Tilmann Schaal, LGT

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Initially, they were buying government bonds, but now, central banks are intervening in financial markets around the world. Is this impacting their independence?

After 18 months in crisis mode, central banks’ balance sheets continue to grow. More and more people are calling for the support measures to be scaled back. But is that even possible at this point?

In a video, Thomas Wille, Head Research and Strategy, LGT Private Banking Europe, and Klaus Adam, Professor of Economics at the University of Mannheim, explain that no, it isn’t possible. Why? Because when central banks buy assets such as mortgage-backed securities, corporate bonds or equity ETFs in addition to government bonds, it has a significant impact on their room for maneuver. To learn more, watch the interview with business journalist Carolin Roth.

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