Reversing the Great Monetary Expansion

Abstract

Monetary historians writing later in this century may refer to its first two decades as the period of the Great Monetary Expansion. In those years, world central banks embarked on the biggest monetary easing ever recorded in central banking history.1 The full panoply of monetary policy instruments was used, and new instruments were invented for that purposes: repurchase operations at all maturities, limitless extension of the collateral lists, outright purchases of all types of securities, announcements of future (expansionary) actions, and negative rates. Modalities varied a bit here and there but all in all, it was a globally consistent, strong and temporally sustained phase of monetary easing.