4min chapter

The "What is Money?" Show cover image

An Examination of Central Banking with Joseph Wang (WiM234)

The "What is Money?" Show

CHAPTER

Central Bank Put on Bond Prices

A lot of people hold government bonds as safe assets and part of it is because the government tells you that my bonds are safe assets. So for the financial stability, we just can't have the US Treasury yields go up every day. It's a systemic risk. And so they're going to try to do something to make it stop. We saw that happen in the UK. If you look over at Japan, they've been doing that for quite some time by something called yield curve control. What that means is that the government is willing to buy infinite amounts of government bonds to make sure that the yields never rise above 25 basis points or 0.25%.

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