Global Liquidity Watch: Weekly Update

Global liquidity levels are rising steadily

Global liquidity levels are rising steadily. The current upturn dating from early July has been driven by collateral values and the collateral multiplier. The cornerstone, i.e., the Shadow Monetary Base, has been underpinned by these rising collateral values, but it continues to be held in check by weak Central Bank liquidity growth. The PBoC stands apart, having resumed liquidity injections in July. The ECB and Bank of England continue to restrict liquidity growth. The Fed is more complex. [The factors affecting US liquidity are discussed in Tensions In US Repo Markets, which was published on 4th October.]