Avoiding chaos after the crisis

THE departure of US Federal Reserve chairman Ben Bernanke has fuelled talk about when and how the Fed and other central banks will end huge purchases of long-term assets, known as quantitative easing (QE).

Observers seize on every new piece of economic data to forecast QE’s continuation or a quickening of its decline. But more attention needs to be paid to the impact of either outcome on different economic players.

There is no doubting the scale of the QE programmes. Since the start of the financial crisis more than half a decade ago, the Fed, the European Central Bank, the Bank of England, and the Bank of Japan have used QE to inject more than €3 trillion of additional liquidity into their economies. When these programmes end, governments, some emerging markets, and some corporations could be vulnerable. They need to prepare.