Central Banks are Playing a Big Role in Easing Financial Crisis

COVID19 pandemic has affected the world in huge proportions. People are learning new ways of life that include social distancing, regularly washing hands or using a sanitizer, wearing masks more often and much more.

Another way this has affected is by changing the dynamics of world economy. According to the latest Covid19 news by Qatarday, International Monetary Fund (IMF) writes that this global economic crisis might just worsen. It suggests that central banks can and will be playing a major role in easing it a bit.

It said that central banks are acting like a first line of defense against this economic crisis. By cutting policy rates they’ve largely eased monetary policy. This is seen in advanced economies, countries with lower income and emerging markets as well. Another step taken by Central banks has been that of providing financial system with additional liquidity. This also includes through operations of open market.

With these two steps, a number of central banks have also agreed on Swap line arrangements. Here they’ll increase the liquidity of US dollars. Lastly, central banks are using programs reserved for global financial crisis. They’ve stepped in as buyers of assets which are riskier such as corporate bonds. These banks are insuring that individuals and businesses have access to credit at affordable rates. Meanwhile, the latest news is that the IMF states that there are 5 percent chances that the world economic growth will come lower than minus 7.5 percent. This number was seen above plus 2.6 percent last year in October. IMF data suggests that such a slump comes once in 20 years.

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