Macro-Financial Stability in the COVID-19 Crisis: Some Reflections

Tobias Adrian, Fabio Natalucci and Mahvash Qureshi

No 2022/251, IMF Working Papers from International Monetary Fund

Abstract: The global financial system has shown remarkable resilience during the COVID-19 pandemic, despite a sharp decline in economic activity and the initial financial market upheaval in March 2020. This paper takes stock of the factors that contributed to this resilience, focusing on the role of monetary and financial policies. In response to the pandemic-induced crisis, major central banks acted swiftly and decisively, cutting policy rates, introducing new asset purchase programs, providing liquidity support for the banking system, and creating several emergency facilities to sustain the flow of credit to the real economy. Several emerging market central banks also deployed asset purchase programs for the first time. While the pandemic crisis has underscored the importance of policies in preventing calamitous financial outcomes, it has also brought to the fore some unintended consequences of policy actions—in particular, of providing prolonged monetary policy support and applying regulation to specific segments of the financial system rather than taking a broader approach—that could undermine financial stability in the future.

Keywords: COVID-19 pandemic crisis; monetary policy; financial stability; emerging markets; central bank asset; purchase program; monetary policy support; market liquidity; asset purchase; COVID-19; Inflation; Global financial crisis of 2008-2009; Capital flows; Financial sector stability; Global (search for similar items in EconPapers)
Pages: 27
Date: 2022-12-16
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=525739 (application/pdf)

Related works:
Journal Article: Macro-Financial Stability in the COVID-19 Crisis: Some Reflections (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2022/251

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().