Central banks today face many challenges – but three of the biggest are: • First, how to judge where central bank balance sheets should settle in the medium term as monetary policy makers return inflation – which remains far too high – to target, through a combination of higher interest rates and unwinding Quantitative Easing (QE) and other ‘unconventional’ policy interventions; • Second, on the micro-prudential side, how to ensure that banks’ liquidity insurance remains appropriate as technological change increases the risk of larger and faster deposit runs, of the kind seen this Spring in the US; and • Third, on ... (full story)