Can QE bankrupt SARB?

1 view
Skip to first unread message

Graeme

unread,
Apr 14, 2021, 4:53:26 AMApr 14
to LibertarianSA
Hi,

Can someone help me understand Lesetja Kganyago comments below:

A large QE programme carries the risk of being inflationary, and costly to the Reserve Bank, so much so it could render the bank insolvent within a year, Kganyago said. This would add to Treasury's debt burdens. "A big QE operation wouldn't lift the budget constraint. Instead, it would end up saddling the Treasury with yet another bankrupt government enterprise asking for a bailout," Kganyago said.


How could printing money to buy government bonds bankrupt the SARB? That doesn't make sense to me.

I suspect he's just bullshitting the ignorant, capitalizing on fears that SARB ends up like Eskom or SAA, causing the currency to fall dramatically like in Zim. He does this to alleviate political pressure to engage in QE.

Of course I'm against QE, I'm just questioning the argument Kganyago makes against it to make sure I understand things properly.

Thanks,
Graeme
Reply all
Reply to author
Forward
0 new messages