Name: Coronavirus: how to tackle the economic crisis | FT
Uploaded: 2020-03-26T09:55:53.000Z
Duration: 4 min 49 s
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00:00:00,000 --> 00:00:04,980 The spread of the coronavirus, Covid-19,

prospects of the global economy and the euro area economy.

The Covid-19 disease that has devastated China, Italy,

and Iran is about to hit many other countries

We are starting now to see the data of just how

And it doesn't come just from the disease,

but from the measures governments are forced

They have taken draconian measures in one country

But this means that swaths of the economy

And we are looking now at a downturn at least as

and very probably quite a lot larger and deeper.

In response to this, policymakers have taken

unprecedented actions in order to try to minimise an economic

They have used both monetary policy and fiscal policy

Monetary policy is what central banks do.

But that's why we're doing everything we're doing.

We're doing whatever it takes to get through it.

I think we're going to do something that gets money

That may not be an accurate way of doing it,

by the end of the day what we're going to do be doing.

The world's central banks have done three types of things

in order to reduce the economic consequences.

00:01:51,610 --> 00:01:54,150 The first is to reduce interest rates in order

to continue to borrow and to have a little bit

Especially the Bank of England and the Federal Reserve,

have put in place dramatic and very fast interest rate cuts.

00:02:13,670 --> 00:02:15,950 The second thing that central banks have done

is to intervene in markets, put a lot of money

into financial markets in order to make sure

that they function properly, and in order

They have also reduced, taken away some regulations,

00:02:38,080 --> 00:02:39,610 And the third thing they have done

is that they have gone on a buying spree.

Central banks have put a lot of money on the line

in order to buy assets such as government

to make it easier for people to borrow and finance themselves

And that means that central bank balance sheets that

are now set to become even quite a lot bigger.

What about the fiscal policymakers, governments?

They are also using their budgets vigorously

and in unprecedented quantities in order to cushion the shock.

00:03:31,180 --> 00:03:32,860 Most governments certainly in Europe

are committing to subsidising the wages of people

The intention is to prevent what is hopefully

a short shock from the disease from destroying

jobs and destroying companies to such an extent

that when governments can lift the restrictions on movement

and interaction, there are no jobs or shops or companies

So governments are looking at increasing their debt

have very large public debt burdens after the last crisis,

people are somewhat worried that they will

But that's when we go back to the central bank action again.

When central banks buy government bonds in what is

called QE - quantitative easing - or asset purchase programmes,

they ensure that the borrowing costs for governments are low.

So the intention, at least, is to allow governments

to borrow as much as they need to do whatever it takes

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Coronavirus: how to tackle the economic crisis | FT

significant

properly

crisis

unprecedented