Central Bank Intervention Unprecedented in scale and Scope

The Fed though is in the process of a very large change in the composition of its balance sheet, as it will temporarily be holding Agencies as an asset against its liabilities rather than Treasuries. It hasn’t formally bought the Agencies though, only allowed banks and broker dealers with Agencies and certain private mortgage-backed securities on hand to use them as collateral to borrow (temporarily) the Fed’s existing Treasuries.
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As around $900b, the fed’s balance sheet is something like 6-7% of US GDP. With $1600b in foreign assets, the PBoC’s external balance sheet alone is more like 50% of China’s GDP.
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But with Martin Wolf now arguing that scenarios with more than a trillion in credit market losses cannot be ruled out – even more unprecedented central bank — and government — action cannot be entirely ruled out. The scale of the “great unwind” has been stunning. The pace of change in the policy debate only slightly less so.