As advanced-country central banks have intensified quantitative easing, developing-country leaders have increasingly voiced concern about the policy’s adverse spillover effects. But the debate is missing one crucial issue: QE has enabled developed economies to collect a massive amount of seigniorage from developing countries.
NEW YORK – As the central banks of major developed economies have intensified quantitative easing (QE, or large-scale purchases of government bonds and other long-term securities), developing-country leaders have increasingly voiced concern about the policy’s adverse impact on their economies’ stability and growth. They cite the dangers of volatile capital inflows, commodity-price fluctuations, and local-currency appreciation, as well as the attendant risks of asset bubbles and inflation.
NEW YORK – As the central banks of major developed economies have intensified quantitative easing (QE, or large-scale purchases of government bonds and other long-term securities), developing-country leaders have increasingly voiced concern about the policy’s adverse impact on their economies’ stability and growth. They cite the dangers of volatile capital inflows, commodity-price fluctuations, and local-currency appreciation, as well as the attendant risks of asset bubbles and inflation.