Beware of the addiction to "magic money". The liquidity that has been flowing since the start of the Covid crisis, massively injected by the world's major financiers, cannot be unlimited. This is, in essence, the message sent by the Bank for International Settlements (BIS), an institution based since 1930 in Basel, Switzerland, nicknamed the "bank of central banks", in its annual report published on Tuesday.
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Central banks played a crucial, rapid and massive role, in coordination with governments, to cushion the initial economic effects and the risks of slippage in the financial markets of the coronavirus crisis. But it is time to think about leaving this exceptional intervention phase.
" Central bank responses, crucial as they are, have a fundamental limitation," says the report. They provide temporary funding but cannot transfer resources. They generate additional debt and
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