Two of the least appealing features of central banks through the crisis have been their petty point scoring and over-complication of their operations. This creates the impression of big differences in approach, which I will explain is not true.

First, let me demonstrate what I am talking about with the use of a few examples. Spencer Dale, the Bank of England’s chief economist, crowed last week that “unlike some other central banks”, the Bank of England can “withdraw the stimulus, raising the bank rate and selling assets” without the “need to create new instruments to drain excess reserves or alter the terms of existing facilities”. But he was was not brave enough either to say that he was talking about the Fed, or to mention the complete failure of the Bank’s own sterling monetary framework during the crisis and its subsequent “alteration”.

But Spencer is far from alone. As Ralph has regularly pointed out, the ECB believes it spotted the crisis earlier than anyone else, thinks its liquidity operations were superior to those operated by the Fed and Bank of England before the crisis, and suggests it is ahead of the game on exit strategies.

The Fed, meanwhile, has got everyone excited about reverse repos and a whole raft of three and four-letter acronyms which serve, more often than not, to obscure its underlying policy rather than reveal it.

Rather than get irritated or confused by these traits, I would suggest that everyone remember the four following points about the banks’ plans to exit from their extremely loose policies:

1. They are all gradually eliminating their extraordinary liquidity policies

At its peak, the Fed was lending Read more