Meanwhile, In China: A Cash Crunch

Meanwhile, In China: A Cash Crunch

China engineered a pretty epic cash squeeze this week. Liquidity withdrawals over the past several days stoked fears of tighter policy at a time when the market was already concerned that relative strength in the world's second-largest economy was emboldening the PBoC, which has made no secret of its desire to dial down accommodation, exercise "prudence," and otherwise normalize policy now that the pandemic has subsided. The central bank's efforts to drain liquidity drove up interbank rates, a
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4 thoughts on “Meanwhile, In China: A Cash Crunch

    1. Interesting question. I think it’s a big part of their playbook. But with MMT, the main release valve is probably the currency exchange rates, which they also manipulate so it’s hard to get a clear picture.

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