Eoin Treacy's view There has been a great deal of expectation that centrals banks are on the cusp of announced fresh measures to increase liquidity amid concerns the global economy is slowing. However one has to ask which central banks are most likely to act in this regard?

The US economy has experienced slowing velocity of money for the better part of a decade. This chart also helps to illustrate the fact that the economy never really recovered from the tech bubble and that the measures adopted to cope with the fallout from that event did not succeed in reversing the decline. In fact one could argue that they contributed to the credit crisis which exaggerated the decline even further.

I do not believe it is a coincidence that the valuation contraction so often spoken of at Fullermoney over the last decade has coincided with the declining velocity of money over the same timeframe. At a minimum, one of the effects has been that below par economic growth has encouraged mega-caps to concentrate more on building their presence in high growth markets which puts them in good stead to benefit when the US economy eventually turns the corner. For as long as the Velocity of Money is trending lower, the Fed can be expected to continue to increase the supply of money and to keep interest rates low.

The Eurozone's internal differences were again highlighted today with Germany posting a modest growth rate and a number of peripheral countries still mired in recession. While discussion has focused on how the ECB has overstepped its remit and how much further it is willing to go, its original mandate was to abide by an inflation target. With the Eurozone's economy contracting, the ECB is free to print as much as is needed to compensate for declining velocity of money. The fall in short-dated Spanish government bond yields and contracting spread between 3-month Euro LIBOR and 3-month generic government rates suggests that liquidity provision is already underway. Whether these measures will eventually be superseded by an even greater commitment of capital remains the question that has occupied the most column inches over the last few months. What is clear however is that the ECB will do what is required to sustain the currency.

China's CPI inflation has been contracting since late last year as its various tightening measures began to show results. Concurrently the pace of economic growth has moderated and the housing market is under pressure. With slowing inflation and the uncertain growth outlook in some of China's largest export markets, the monetary authorities have the capacity to ease if they need to. The lowering of transaction taxes on share dealing and the weakening of the Renminbi are both recent signals that the tone of policy is moving towards easing.

When the condition of the three major economies is taken into the account, there is potential for additional liquidity provision globally. However, just how imminent such moves are is dependent on how events unfold in the various economies mentioned above. China appears to be the country with the greatest potential to ease while Europe may be forced into additional action by events. The USA's deleveraging cycle has not yet ended but is mature. While there is scope for additional easing it is not the most likely economic region to enact such policy.