Report
If the world needs to invest a lot, now is not the time to extend the maturity of government debt
First, it is important to understand that quantitative easing (QE) is simply a shortening of the maturity of the government’s debt . It does this by replacing bonds on the liabilities side of a consolidated government balance sheet (government proper + central bank) with bank reserve accounts at the central bank (which are remunerated at the short-term interest rate) . Quantitative tightening (QT) is therefore an extension of the maturity of the public debt. T here is now going to be a huge need for investment and therefore for long-term borrowing: corporate investment to raise productivity gains, investment in the energy transition. With these long-term borrowing needs set to increase considerably , it is not the time to increase the government’s long-term debt.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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