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In practice, the ECB's banknotes are put into circulation by the NCBs, thereby incurring matching liabilities vis-à-vis the ECB.
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In Britain pension funds have been eager buyers of long-dated securities as a way of matching their liabilities (a promise to make pension payments for 25-30 years is equivalent to a debt).
There won't be a lot of en masse movement out of fixed income because you need it for matching future liabilities, but in this, the marginal dollar investment is coming out of there.
Pension funds, insurance companies and ETFs are focused on matching their liabilities to their assets.
The former have to match their liabilities which are bond-like; the latter need reserves.
Japan's pension funds and insurers accumulate long-term bonds to match their liabilities.
The defined-benefit pension sector would like to own more bonds, in order to match its liabilities.
So pension funds could match their liabilities by switching out of shares and moving into bonds.This is a controversial subject.
Part of the reason is that pension funds have changed their behaviour, to seek out assets that match their liabilities.
Pension schemes looking for long-term, local investments to match their liabilities could fund desperately-needed roads, ports, railways and houses.
Thus any strategy that does not exactly match the liabilities with a portfoilio of bonds is essentially playing hedge funds with public money.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com