Central Bank Policy Scenarios and Their Impact on Asset Classes
Anastassios Frangulidis, Head of Multi Asset Switzerland and Chief Strategist, Pictet Asset Management
Andreas Koester, Chief Investment Officer, Union Investment
Since the financial crisis, central banks have greatly changed and expanded the scope of their activities. Their increasing influence and the legacy of their actions raise a number of questions. One very immediate one is how much they are distorting market processes and thus also affecting asset prices. And, consequently, when and in what form a normalization of central banks' activities can be expected and what effect reductions of their balance sheets will have on markets.
Understanding the interplay between collateral and liquidity policy is essential to any debate over different tightening scenarios and their impact on financial markets. This is not limited to the activities of central banks; it also concerns commercial banks, through lending and the buying of securities. During periods of tight monetary policy, liquidity declines while risk premia rise. Depending on the scenario, a serious impact on real yields, economic development, and—ultimately and in particular—various asset classes is to be expected. Accordingly, a comprehensive understanding of what can be done, and the potential consequences, is key for the Swiss banking sector.
Objective
- Explore how global liquidity has evolved since the onset of the financial crisis.
- Survey central bank policies on liquidity and collateral and understand their implications (e.g., in terms of market discipline and prices).
- Discuss the impact of global central bank liquidity on real yields and equity markets.
- Debate how different tightening scenarios might impact the value of various asset classes.
Target Audience
This Master Class is aimed at professionals from the financial industry who want to deepen their understanding how central bank policies impact financial markets and who work in asset and wealth management or risk management. The format is a combination of presentations, discussions, and group problem solving.
SAQ Recertification
This SFI Master Class is an acknowledged SAQ recertification measure for CWMA, CCoB, Affluent-, SME-, and Individual Client Advisor profiles and comprises four learning hours (4 credits).