Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
The Hidden Cost of Central Bank Balance Sheets
Most listeners know central banks set interest rates, but fewer understand how the size of their balance sheets actually dictates market liquidity. In this episode, Lucas and Luna unpack the mechanics of quantitative tightening and the unspoken friction it creates for corporate borrowing. We look at a specific case from late 2025 where a major European bank faced a liquidity crunch not because of bad loans, but because of shrinking central bank reserves. You will learn why the Fed's $8 trillion portfolio matters more to your local business loan than the federal funds rate itself, and how…
The skinny
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