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QExit, whatsit, whodunnit?

It is still unclear what will happen when central banks stop buying government bonds and other financial assets from the market, and start selling those assets instead

Published Wed, Nov 1, 2017 · 09:50 PM

Hock Lock Siew

IF you have trouble sleeping, one possible way to nod off is to get someone to explain "quantitative easing" to you.

QE is probably one of the least understood, yet most dominant ideas in financial markets ever since the global financial crisis almost 10 years ago.

Here is another head-scratcher that will befuddle in the coming months: The exit from quantitative easing, which some wits have dubbed "QExit."

In the second half of 2018, net asset purchases by advanced economy central banks are expected to be close to zero by end-2018.

This is down from US$100 billion a month today, and US$180 billion a month back in mid-2016, said a Citi report in September.

Notably, the European Central Bank (ECB) announced last month that it was now winding down its spate of bond purchases in recent years. The European QE i…