Central bank balance sheets across the world have grown in size and have almost doubled in the last decade and now amount to about 30 per cent of world GDP. Central banks have quickly emerged as the single largest creditors of governments, especially, in the beleaguered Eurozone.
Interest rates too have been slashed in a bid to stimulate the sagging economies and the rates are either zero or nearly zero in advanced economies. The expanded balance sheets of the central banks and the near zero policy rates have raised concerns that financial imbalances may buildup all over again. It is now five years since the outbreak of the global financial crisis.