The Weird and Not-So-Wonderful World of Asian QE
Central banks are doing everything they can to revive growth. But blurring the line with fiscal spending comes with risks.
Investors aren’t worried… for now.
Photographer: Jean Chung/BloombergFrom Seoul to Jakarta, central banks are breaking decades-old conventions to stabilize markets and put a floor under cratering economic activity. They’re cutting interest rates to zero, buying bonds and financing budgets in all but name — each a step that would have been considered contentious six months ago.
These actions are justified in the wake of the coronavirus, and in some ways resemble the course charted in the developed world since the global financial crisis. But unlike in the U.S., Europe and Japan, there’s a worrying air of improvisation about them. These measures risk blurring the line between governments and monetary authorities, and could undo the progress Asian economies have made in recent decades to earn the trust of foreign investors.