COVID-19 Pandemic: World Central Banks’ Reactions to Economic Downturn

183
DOI: 10.20542/0131-2227-2021-65-2-53-61
V. Usoskin (v_ouss31@mail.ru), 
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation

Abstract. Measures to mitigate the effects of the COVID 19 pandemic on households and businesses taken by Western governments in 2020 had serious negative consequences for the global economy. There was a widespread fall of production and trade, the closure of enterprises and stagnation of entire industries, sharp increase in unemployment, rise of uncertainty and risks. In an effort to slow the development of economic downturn the central banks and the Treasuries had taken wide range of monetary measures. Some of which were the continuation of the programs initiated during the period of global financial crisis of 2007–2009 and adapted to the current economic situation and the others represented new programs for the purchase of financial assets and granting credit facilities to enterprises and households. These actions, aimed primarily at the issue of additional quantities of money into the circulation, were distinguished by very large scale and high speed of decision-making. The author’s analysis led to a conclusion that the monetary policy during COVID 19 pandemic helped to stabilize financial markets, preserved the activities of a part of small and medium-sized enterprises and improved employment in the labor market. At the same time, massive “quantitative easing” operations increased the risk of financial instability and the likelihood of emerging of difficult-to-control inflationary spiral in Western economies. As to the achievement of strategic goals of monetary policy in the macroeconomic sphere, the success was much less noticeable due to the influence of many nonmonetary factors on the level of employment and the rate of economic growth. 

Keywords: monetary policy, COVID 19 pandemic, financial crisis of 2007–2009, interest rates regulation, quantitative easing, lending facilities


REFERENCES

  1. Evaluating the Initial Impact of COVID-19 Containment Measures on Economic Activity. Paris, OECD, 2020. 16 ð.
  2. Monetary Policy in a Pandemic Emergency. Frankfurt am Main, ECB, November 11, 2020. Available at: https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp201111~d01e03eb9c.en.html (accessed 14.11.2020).
  3. Haas J., Neely C.J. Central Bank Responses to COVID‑19. Federal Reserve Bank of St. Louis, Economic Synopses, 2020, no. 28, ðp. 1-5.
  4. Taylor J. Discretion versus Policy Rules in Practice. Carnegie-Rochester Conference Series on Public Policy, vol. 39, December 1993, pp. 195-214.
  5. Bernanke B. The Economic Outlook and Monetary Policy. Available at: https://www.federalreserve.gov/newsevents/speech/bernanke20100827a.htm (accessed 14.11.2020).
  6. FRS. Money Stock Measures. H.6 Release. September 19, 2020. 2 ð.
  7. Board of Governors of the FRS. Monetary Policy Report. June 12, 2020. 58 p.
  8. ECB Announces 750 Billion Euro Pandemic Emergency Purchase Programme (PEPP). ECB Press Release, March 18, 2020. 2 ð.
  9. Monetary Policy Decisions. Frankfurt am Main, ECB, June 4, 2020. 2 ð.
  10. Bank of Japan. Enhancement of Monetary Easing in Light of the Impact of the Outbreak at the Novel Coronavirus (COVID-19). Press Release, March 16, 2020. 7 ð.
  11. FRS. Federal Reserve Takes Additional Actions to Provide up to $2.3 Trillion in Loans Support the Economy. Press Release, April 9, 2020. 3 ð.
  12. Board of Governors of the FRS. Monetary Policy Report, June 12, 2020. 58 ð.
  13. FRS. Main Street New Loan Facility. Press Release, April 30, 2020. 2 ð.
  14. ECB. ECB Announces Easing of Conditions for Targeted Longer-term Refinancing Operations (TLTRO III). Press Release, March 12, 2020. 2 ð.
  15. Bank of England. Term Funding Scheme with Additional Incentives for SMEs (TFSME). Market Notice, March 11, 2020. 6 ð.
  16. Bank of England. Joint HM Treasury and Bank of England COVID Corporate Financing (CCFF). Market Notice, March 18, 2020. 5 ð.
  17. Bank of Japan. Special Funds-Supplying Operations to Facilitate Corporate Financing Regarding the Novel Coronavirus. Press Release, March 2020. 3 ð.
  18. Board of Governors of the FRS. Statement on Longer-Run Goals and Monetary Policy Strategy. Monetary Policy Report, June 12, 2020, ðð. III-IV.
  19. Draghi M. Introductory Statement to the Press Conference. Frankfurt am Main, ECB, April 15, 2015. 8 ð.
  20. Wiedemann J. Give Policy Decision Time. Berlin, Bundesbank, 2016. 4 ð.
  21. Powell J. Recent Economic Developments and the Challenges Ahead. October 6, 2020. Available at: https://www.federalreserve.gov/newsevents/speech/powell20201006a.htm (accessed 14.11.2020).

Registered in System SCIENCE INDEX

For citation:
Usoskin V. COVID-19 Pandemic: World Central Banks’ Reactions to Economic Downturn. World Eñonomy and International Relations, 2021, vol. 65, no. 2, pp. 53-61. https://doi.org/10.20542/0131-2227-2021-65-2-53-61



Comments (0)

No comments

Add comment







Indexed

 

 

 

 

Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies

 

Current Issue
2025, vol. 69, No. 2
Topical Themes of the Issue:
  • Battle of Titans: Structural Shifts in MNCs Global Production
  • Features of Collective Securitization in the European Union
  • Terrorist Networks of the “Global Jihad” in the 2020s
  • At Post-Soviet Space
Announcement

Dear authors of the journal!

Please note that the author's copies of the issues in which your texts are published are kept in the editorial office for no more than one year. After this period expires, the editorial office has the right to dispose of unclaimed copies at its own discretion.

 

Submit an Article
INVITATION FOR PUBLICATION
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.