Thread by @Pierre_Monnin

The @ecb response to #COVID19.

My new blog (link below) and a thread on what #centralbanks should do to face the crisis

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In short
- Households & firms need massive emergency #credit to cope with #COVID19
- #centralbanks are critically accommodating credit markets
- CBs must guarantee sustainable credit conditions
- CBs must ensure that credit go where it's needed
- #HelicopterMoney is option
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#fiscalpolicy is crucial to ensure most vulnerable get the help needed. Ambitious fiscal plans have been pledged.

Volume and price countries get on markets is key to scale-up public response to #COVID19 and for #sustainability of sovereign debt.

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#fiscalpolicy will not cover all families' and businesses' emergency needs. Some will need bank loans.

#CentralBanks thus face massive demand for public and private emergency credit. They can ensure that enough emergency credits are provided at #sustainable conditions.

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#CentralBanks have set #interestrates at zero since outbreak of #COVID19 crisis.

Interest rates at zero for bonds and bank loans are necessary to ensure that debt service burden of emergency credits remains sustainable after the shutdown, and do not jeopardize recovery.

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With #PEPP, @ecb has taken decisive action to ensure that European countries’ debt price don’t soar on markets.

#centralbanks must also ensure that banks provide #loans at low rates to SMEs, to maintain #sustainability of their debt service burden after the recovery.

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Credit must go where it is needed and reach
- countries that needs resources to contain #COVID19
- firms directly affected by the crisis

#centralbanks new asset purchases must reflect distribution of emergency credit needs, not allocation of previous #QE programs

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Credit for those who needs it!

#centralbanks must address issue of firms with structural business plan problems prior to crisis, but that are still getting financial help linked to #COVID19.

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#centralbanks still have one remaining option: #HelicopterMoney!

This directly put funds from the central bank into the “hands”, i.e. the bank accounts, of people. It is fast way to reach most vulnerable and would minimize their debt burden.

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ft.com/content/abd6bb…