How do Central Banks expand their balance sheet?

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How do Central Banks expand their balance sheet?

Post by ether »

This is a basic question but I wanted to confirm and potentially get some reading material on how exactly central banks expand their balance sheet?

Question 1:
Right now as central banks expand their balance sheet member banks don't need to contribute cash to fund it and governments don't fund it via taxes, so the money comes from no where, correct?

Question 2:
When countries want to expand their central bank's balance sheet, is there anything stopping government (besides forex devaluation) from having massive deficits and forcing their central bank to buy the government debt?

Question 3:
When central banks buy corporate debt, isn't that effectively nationalization of the company? Have there been cases where central banks even buy equities of private companies?

Question 4:
What happens when central banks reduce their balance sheet, does that money just evaporate? Does it go to the treasury?

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