Washington — The unprecedented growth in central banks’ balance sheets since the financial crisis has had a negative impact on the way in which financial markets function, according to a new report (https://www.bis.org/publ/cgfs63.pdf) from the Bank for International Settlements.

Over the past decade the world’s major central banks have lent vast sums of cheap money as well as buying trillions of dollars in bonds and other assets in a bid to stimulate the global economy. Some are still expanding their balance sheets: the European Central Bank in September decided to restart its €2.6-trillion bond-buying programme, while the Bank of Japan has used bond-buying as a stimulus measure for decades.

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