✅ Over the past two months, global liquidity has significantly decreased, with the Global M2 index – a measure of the total amount of money in circulation worldwide – falling by $4.1 trillion, from $108.5 trillion to $104.4 trillion. This is the lowest level since August 2024.
✅ Global liquidity sharply decreased over the past two months
This decline not only reflects the impact of macroeconomic policies but also signals significant challenges for global financial and economic markets.
🚀 The main cause of the liquidity decline
✅ Tight monetary policies of central banks:
Major central banks like the US Federal Reserve (FED), the European Central Bank (ECB), and the Bank of England (BoE) have continued to maintain and even raise interest rates to control inflation. High-interest rates increase borrowing costs, reducing the demand for loans and consumption in the economy.
✅ At the same time, central banks have reduced their balance sheet size through Quantitative Tightening (QT). This means they are selling financial assets like government bonds instead of buying them, thus pulling liquidity out of the market.
✅ Economic activity declines in many major countries:
Major economies, including the US, Europe, and China, are all facing growth-inhibiting factors. In the US and Europe, high-interest rates reduce spending and investment, while China is struggling with a real estate crisis and weak consumer demand.
These factors lead to a decrease in circulating cash flow in the economy, contributing to a reduction in global money supply...
