The complicated question of a loss of confidence in money

As central banks in OECD countries have kept interest rates very low, the only possible way for them to contribute to boosting activity in the next slowdown will be to further increase the quantity of money (resume quantitative easing). M ost of the countercyclical action in the event of a fall in growth in the future will take place via an increase in fiscal deficits and a resumption of quantitative easing, which will keep long-term interest rates very low. The quantity of the money suppl ied by central banks should therefore be expected to continue to rise in stages . This raises the key question: how far can a central bank increase the size of its balance sheet without confidence being lost in the country’s currency and without a mass conversion of financial assets into another currency? The example of Japan seems to show that this limit is very far away. But do Japanese savers not have specific characteristics that are not present in other countries, and which reduce the risk in Japan of a loss of confidence in money ? Also, what happens if there is a loss of confidence in money, but all central banks in OECD countries have conducted the same policy of central bank balance sheet expansion?