A qualification has to be made to Gillian Tett’s otherwise excellent article “US investors need to look further” (Opinion, 24 February).
Despite inevitable small leaks, the Chinese capital account is still closed to short-term capital flows. Therefore, changes in the Bank of China’s liquidity affect global liquidity only indirectly – via liquidity-induced changes in trade flows and long-term capital flows, which are tiny compared to global short-term capital flows.
But Tett’s argument is spot on for the Bank of Japan, the European Central Bank, and indeed all central banks in countries with open capital accounts and freely floating exchange rates.
The global investment community would be well served if one of the major global banks collected such data and made it widely available on a regular basis.
William Jacobson
Sarasota, FL, USA
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