Central Banks To Stay Aggressive: EIU

Central banks are unlikely to pull back from the more prominent role they have assumed post-2008. This has as much to do with the growing complexity of global financial markets as with the recent crises and lack of government action, says a new report from the Economist Intelligence Unit. The search for growth: Central banks in uncharted territory, written by the EIU and sponsored by BNY Mellon, examines the implications of the expanding role of central banks.

The report compares the opinions of nine prominent economists, analysts and portfolio managers. Although these experts disagree on where to place the blame for the current crisis and on their critiques of central bank policies, they agree on the following points:

·         Most experts give central banks high marks for tempering what could have been a far worse global financial crisis in 2008. They also believe that the efforts have provided breathing room for governments to reach agreement on measures that would build a stronger and more durable long-term economic recovery.

·         While monetary easing will provide some relief, experts agree that central banks cannot restore a healthy global economy by themselves. Solutions require political compromises that are not within central banks' powers to devise.

·         Emerging-market central banks have matured but they are unlikely to assume a larger role in the global economy anytime soon. Despite successfully weathering the fallout from the 2008 financial crisis, emerging-market central banks lack the transparency, institutional memory and, arguably, the independence from politics to assume a role similar to their developed market counterparts.

The search for growth: Central banks in uncharted territory

is available free of charge at:

http://digitalresearch.eiu.com/searchforgrowth/