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The OMFIF view: Coronavirus

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The OMFIF view: Coronavirus

Latest opinion and analysis from OMFIF on the coronavirus outbreak

6 March 2020 

David Marsh and Danae Kyriakopoulou in London

Amid virus crisis, Europe fights back: First big test for Lagarde: Christine Lagarde has a chance of surmounting her first big monetary test and enhancing her reputation for coolheaded professionalism by heading off further across-the board European Central Bank easing to counter corona virus-induced threats. If the ECB president handles the dilemma adroitly, and barring any further substantive worsening, Lagarde, who took over from Mario Draghi on 1 November, could mark a decisive change compared with her predecessor.

Read more.

Pierre Ortlieb in London

Fed should bring back dollar swap lines: The global spread of coronavirus may require US policy-makers to dust off an old, 2008 crisis-era tool of dollar liquidity management – the temporary reciprocal currency arrangements, or central bank liquidity swap lines. These would help alleviate the virus’s impact. Read more.

Mark Sobel in Washington

Fed’s coronavirus conundrum: With the Fed Funds rate already low and not that far from the zero-lower bound, undoubtedly decision-makers face a dilemma. If lower rates don’t have much impact, they may have to use up some of the spare room. Read more and listen to his ‘China: Impact of the coronavirus’ podcast

David Marsh in London

Amid virus crisis, Europe fights back: ‘Europe needs a project.’ This statement from a senior European Commission official, at an OMFIF seminar, epitomises a mood of determination that the coronavirus scare could, against all the odds, spark an unlikely upturn in EU fortunes. Read more.

Meghnad Desai in London

Predicting random shocks: Global markets are facing two challenges. First is the possible effects of climate change, but the more pressing, and unpredicted, challenge is the spread of coronavirus. This is a classic ‘black swan’ scenario. Its effects cannot be modelled or anticipated, but it could still cause a recession. Read more.

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