G4 central bank balance sheet to expand to $29 trillion – Morgan Stanley


Observers at Morgan Stanley foresee the cumulative balance sheet of G4 central banks – the US Federal Reserve, Bank of England, Bank of Japan, and the European Central Banks – expanding to an unprecedented $29 trillion by the year-end, almost double the size observed at the end of 2019, as noted by Jeroen Blokland, Portfolio Manager for the Robeco Multi-Asset funds.

Major central banks launched massive stimulus programs earlier this year to contain the fallout from the coroanvirus outbreak. While recent positive news on the coronavirus vaccine front has raised hopes for a swift global recovery, there is still a long way to go before the economic activity reaches pre-panedmic levels. As such, central banks are unlikely to halt or scale back stimulus anytime soon. 

In other words, the G4 balance sheet looks set to expand further. That's positive news for scare assets such as gold. The yellow metal rose to a record high of $2,075 per ounce in August and was last seen trading near $1,810. 

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