Central banks aren’t what they used to be – and the better for it

Banks now tackle diverse issues, be it Covid-19, or inequality. Purists may disagree but there’s no other option

We are used to thinking about the remit of central banks as focusing narrowly on price stability, or at most as targeting while ensuring the smooth operation of the payment system. But with the global of 2008 and now Covid-19, we have seen central banks intervening to support a growing range of markets and activities, using instruments that extend well beyond and open market operations.

An example is the US ’s Paycheck Protection Program Liquidity Facility, under which the Fed provides liquidity to lenders who extend loans to small businesses in pandemic-related distress. This, clearly, is not your mother’s central bank.

Related: The $2,000 stimulus cheques alone won’t work – the US needs better infrastructure

Related: Can central banks keep holding off the Covid economic crisis? | Mohamed El-Erian

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