Central bankers all over the world are asking themselves the same question: when is the time to start the Big Exit? It surely cannot be now, or can it? I suspect the right answer is: perhaps not now, but earlier than you think.

Exiting will be a multi-stage process. The technical details will differ from one central bank to another. For the European Central Bank, I would expect the programme to begin with a withdrawal of long-term refinance operations, to be followed by a tightening of the conduct of ordinary liquidity policies. And before the ECB starts raising its main short-term interest rate, it will first raise the deposit rate – at which banks can deposit surplus cash.