China recreates the Mississippi blue
At -3% in year on year terms, China’s published rate of reserve money growth (i.e. the amount of money circulating within the banking system) appears exceptionally weak and certainly far at odds with the ECB’s 40% rate of base money growth or even the Bank of Japan’s 26% YoY rate. Indeed, taken at first sight, the behaviour of the PBoC’s balance sheet would appear to represent that of a central bank that is in the midst of tightening and, when one also notes that interbank rates have tended to drift higher since March, one could easily come to the conclusion that the PBoC is indeed in a restrictive mode at present.
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