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Central banks' response to Covid-19 in advanced economies


  • Paolo Cavallino
  • Fiorella De Fiore


Central banks in advanced economies reacted swiftly and forcefully to the Covid-19 pandemic, deploying the full range of crisis tools within weeks. The initial response focused primarily on easing financial stress and ensuring a smooth flow of credit to the private non-financial sector.The pandemic triggered complementary responses from monetary and fiscal authorities. Fiscal backstops and loan guarantees supported central bank actions. Asset purchases, designed to achieve central banks' objectives, helped contain the costs of fiscal expansions. The footprint of central banks' measures will be sizeable. Across the five largest advanced economies, balance sheets are projected to grow on average by 15-23% of GDP before end-2020 and to remain large in the near future.

Suggested Citation

  • Paolo Cavallino & Fiorella De Fiore, 2020. "Central banks' response to Covid-19 in advanced economies," BIS Bulletins 21, Bank for International Settlements.
  • Handle: RePEc:bis:bisblt:21

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    References listed on IDEAS

    1. Andreas Schrimpf & Hyun Song Shin & Vladyslav Sushko, 2020. "Leverage and margin spirals in fixed income markets during the Covid-19 crisis," BIS Bulletins 2, Bank for International Settlements.
    2. Stefan Avdjiev & Egemen Eren & Patrick McGuire, 2020. "Dollar funding costs during the Covid-19 crisis through the lens of the FX swap market," BIS Bulletins 1, Bank for International Settlements.
    3. Enrique Alberola-Ila & Yavuz Arslan & Gong Cheng & Richhild Moessner, 2020. "The fiscal response to the Covid-19 crisis in advanced and emerging market economies," BIS Bulletins 23, Bank for International Settlements.
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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Economic policy > Money and monetary policy


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