Bank of Canada's Operating System: from Zero to Abundant Reserves
Ever since March 2020, the amount of deposits (reserves, or settlement balances) held by banks at the Bank of Canada has exploded, as it did before in the USA, UK or Japan, under the guise of quantitative easing. How did central bankers justify such actions in the past? How is it justified today? How are these reserves created? What are its counterparts on the asset side? What are the consequences, if any, of this huge increase in the balance sheet of the central bank?
Marc Lavoie is a Research Fellow at the Macroeconomic Research Institute of the Hans Böckler Foundation in Düsseldorf, Research Associate at the Broadbent Institute in Toronto, and recently ended a three-year stint as a Senior Research Chair from the University Sorbonne. He is now Emeritus Professor at the University of Sorbonne Paris Nord and the University of Ottawa. Marc published 10 books, over 150 refereed articles and 80 book chapters, and is best known for his book with Wynne Godley Monetary Economics (2007). His latest book, Post-Keynesian Economics: New Foundations, received the 2017 Myrdal Prize from the European Association of Evolutionary Political Economy. He is a co-editor of two academic journals and is on the editorial board of 10 other journals.
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