FT Interactive Opinion • Chart of the Week Monetary Policy Laboratory
Macroeconomic Architecture

Central Bank Quantitative Easing & Balance Sheet Simulator

Explore "the long shadow of quantitative easing." Manipulate runoff speeds, emergency facilities, and reinvestment floors to project central bank asset contraction and reserve liquidity over a 10-year horizon.

Policy Instruments & Levers

Scenario Presets
$7.5T
Total starting balance sheet assets (Treasuries + MBS)
$600B/yr
Pace of un-reinvested maturing bonds rolling off
$150B
Liquidity facility backstops sustaining systemic shadow balances
$0B/mo
New monthly asset purchases if monetary easing is triggered
10 Years
Simulation timeline through 2034
Final Balance Sheet
$4.8T
Year 2034 Projected
Peak Bank Reserves
$3.2T
Systemic liquidity peak
Normalization Year
2031
Structural asset floor reached
Regime Status
Long-term shadow sustained
Post-QE structural overhang

Central Bank Asset Stack & Reserve Overhang

Treasuries
MBS Securities
Bank Reserves
Reverse Repo / Facilities
Key Finding: Even after prolonged Quantitative Tightening (QT), structural balance sheets settle substantially higher than pre-2008 or pre-2020 baseline levels. The ample-reserves regime creates an irreducible "long shadow" where commercial banks demand higher liquidity buffers, permanently expanding central bank footprints.

Annual Balance Sheet & Reserve Trajectory ($ Trillions)

Year Treasuries MBS Total Assets Bank Reserves Reverse Repo Systemic Buffer
Data Model Reference: Synthesized Federal Reserve H.4.1 statistical releases, Bank of England balance sheet accounts, and Financial Times macroeconomic analysis on structural quantitative easing overhangs. Projection start period: 2024.
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