Blog: April 2020
Massive changes in monetary policy in the United States and the United Kingdom have occurred since the middle of March, when the seriousness of the coronavirus epidemic was becoming apparent. The changes have not been fully explained by either central bank, let alone justified.
The world is undergoing an unprecedented shock as a result of the Covid-19 pandemic and the widespread lockdowns. As major world economies are being put on hold, millions of jobs and incomes are being lost, which has created an imperative for economic policy actions to counteract the falls in demand and increased market uncertainty.
In the wake of Covid-19 related nursery and school closures, the quality of the home learning environment is more important than ever. We know that very young children depend on high quality interaction to support their cognitive, language, social and emotional development and the current crisis only serves to emphasise the need for good quality programmes that support families in providing the best start for their children.
I propose a universal freeze on balance sheets. This would be similar to a debt standstill but here applied to all obligations including rents and pension contributions. For struggling firms, the policy will take the form of temporary cessation of activities that could have legal status and allow them to continue at the end of the period of lockdown.