[satellite2]

I'm not sure that's completely true. Banks are actually the main issuers of new money. The central banks are actually more of a banking lubricant I'm normal times. Obviously they can substitute from banks and make the credit conditions better. But they cannot really make them worse.

What's happening now is that most central bank have been stimulating the economy by lending at rates under the "natural" rate and they are now stopping.

[cm2187]

They can absolutely make credit conditions worse, through capital requirement and liquidity requirement. Also if you withdraw QE, it drains banks deposits and their ability to fund new loans.

[satellite2]

Capital and liquidity requirements are not decided by central banks generally. In most democracies it's a legislative branch responsibility. They cannot "withdraw" QE. What they have been doing is buying bonds at a higher price than the market thus lowering the interest rates they simple buy them a bit cheaper now.

[cm2187]

Capital and liquidity requirements are negotiated by central banks in the basel committee. Then the central bank will add its own home made requirements, and that’s the legislation that gets proposed to parliament. The legislation includes all sort of discretionary buffers that the central bank can freely impose. Central banks are front and centre in banks regulatory requirements.

Withdraw QE = either sell bonds or let them mature, reducing the size of the fed balance sheet. Which drains liquidity from the market (new treasury issuances have to be absorbed by the market).

[satellite2]

Minimum capital requirements are laws. They are defined in the Dodd-Frank Act in the US for instance.