TOKYO – Has China’s Paul Volcker moment arrived?
Stock punters can’t help but wonder as the People’s Bank of China (PBOC) opts against refilling the proverbial monetary punchbowl, helping to send mainland shares sharply lower. It is also proving quite the contrast to a US Federal Reserve opening the liquidity tap ever wider.
For years now, observers wondered if the PBOC might emulate the hawkish policies of Volcker, who ran the Federal Reserve from 1979 to 1987 while keeping financial leverage on a very tight leash. Volcker’s policies, along with the hard-money ways of the Bundesbank of old, set the standard for monetary sobriety.
Now, there’s good reason to think PBOC Governor Yi Gang is reading more from the Volcker playbook than from those of Fed Chairman Jerome Powell or Bank of Japan Governor Haruhiko Kuroda.