Richy Rich

Passing the Torch

Draghi Yellen-Reuters2
"Mario, you must take over where I left off." Janet Yellin speaking to Mario Draghi in August.
  • Why it matters

    Why it matters

    A global shift in central banking is underway. At stake is the value of assets owned by people around the world, but mostly the wealthy. Central banks have been inflating the value of these assets.

  • Facts


    • The U.S. Federal Reserve last week ended its “quantitative easing” bond-buying program and may raise interest rates next year. Analysts expect the ECB could launch such a program next year.
    • Calculations by Citigroup investment strategists show that $200 billion (€160 billion) in new central bank liquidity per quarter is needed to prevent the securities markets from becoming deflated.
    • Thanks to the Bank of Japan’s recent decision to increase its own bond-buying program, the world’s five richest families saw the value of their assets increase by $3.8 billion.
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Asset managers for the rich and super-rich around the world were keeping an especially watchful eye on Frankfurt as the governing council of the European Central Bank held its latest monthly meeting Thursday to decide on interest rates and monetary policy.

That’s because the rich and powerful are counting on the ECB to fill their coffers with fresh money, plugging a gap in the market that has been left by the exit of the U.S. Federal Reserve.

A global shift is underway in the world of central banking. Last week, the Fed decided to stop buying treasury bonds, which means that it will no longer be pumping additional liquidity into the financial markets. The end of “quantitative easing” in the United States marked a watershed moment in the six-year-old global financial crisis, and a sign that the U.S. economy has largely returned to health.

For asset managers and their clients – attention now turns elsewhere.

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