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Global Policy Responses – Developed Markets Suggestions Or Comments? Please Email Us Suggestions or comments? Please email us Global Policy Responses – Developed Markets Monetary Fiscal Last Updated: Rate Actions Other Measures Direct Support Credit/Loan Guarantees Other July 21 IMF NA NA • The IMF has allocated SDR of 60.4 billion to 77 countries, spread across five continents. The SDRs primarily consist of rapid financing instruments and rapid credit facilities; a small number are flexible credit lines or other special arrangements. • The Catastrophe Containment and Relief Trust has been used to finance debt relief grants for 27 countries struggling to finance their pandemic response under their international debt obligations. This totals SDR177.65 million. • The Short-term Liquidity Line has been established as a renewable backstop for countries in need of short-term BoP support. • On March 25, the IMF (and World Bank) called on bilateral creditors to suspend debt service payments from the poorest countries. G20 NA • Finance ministers met on March • Working with international • On April 15, the G20 responded • Pledged to resolve disruptions to 31 to coordinate COVID-19 response organizations to deliver appropriate to the IMF’s call by suspending global supply chains, ensuring the efforts. financial assistance to emerging and debt service payments from the movement of vital medical • Welcomed the World Bank to developing markets. poorest countries. supplies, agricultural products, and deploy USD160 billion over the next other essential goods and services. 15 months to support the financial stability and liquidity needs of its member nations. • Assessing the risk of debt vulnerabilities in low-income countries. • Another virtual meeting is set to take place on April 15. • An action plan to highlight medium-term measures to support the global economy. Suggestions or comments? Please email us Global Policy Responses – Developed Markets Monetary Fiscal Last Updated: Rate Actions Other Measures Direct Support Credit/Loan Guarantees Other July 21 United States • On March 3, the FOMC lowered • March 12: Made USD1.5 trillion • On March 6, Congress appropriated The March 27 CARES Act includes: • On March 18, the President the interest rate target range by 50 available for short-term interbank USD8.3 billion in emergency funding • USD500 billion in loans for large signed the Families First bps to 1.25% - 1.0%. lending. that includes USD6.5 billion for businesses. Coronavirus Response Act • On March 15, the FOMC cut the • March 15: Fed committed to federal, state and local health depts., • USD350billion in emergency (FFCRAA) requires employers of interest rate target range by 100 purchasing USD700 billion in U.S. up to USD600 million to subsidize grants and loan forgiveness less than 500 employees to provide bps to 0.25% - 0.0%. Treasury securities and mortgage- treatments, USD1.25 billion for programs for SMEs, also known as paid sick leave to employees • At the April 29 FOMC meeting, backed debt; on March 23, purchase international aid, USD20 million in the Paycheck Protection Program. specifically for COVID-19 related the target rate was maintained. limit was left open-ended in order to loans to firms. • All businesses receiving a loan reasons, and guarantees full • At the June 9 & 10 FOMC suppress borrowing costs • On March 27, the USD2.2 trillion under the program are banned insurance coverage of COVID-19 meeting, the target rate was indefinitely. CARES Act was signed by the from stock buybacks for the term testing. maintained. • March 15: Reduced reserve President. It includes USD150 billion of the loan plus one year; all loans, • Tax filing deadline for individuals • At the July 28 & 29 FOMC requirement to zero. for hospitals; USD1200 for each adult their terms and any investments or and businesses delayed two meeting, the target rate was • Activated dollar swap lines with making less than USD75,000/year and other assistance provided by the months to June 15. maintained. key DM central banks (including the smaller checks for those making government must be publicly • Under the CARES Act, payments ECB) and several EM central banks. more; USD500 for each child; disclosed; oversight for all of these on student loans have been • March 17: Fed launched a unemployment support extended to loans will be conducted by a deferred by six months. Commercial Paper Funding Facility four months and increased to a special inspector general and • Refundable tax credit for all to provide liquidity to businesses maximum of USD600/week. independent monitoring businesses to cover wages for and households. • A third relief package totaling committee. employees unable to work due to • March 17: Fed established a USD484 billion was passed the week • The third relief package provides the COVID-19 pandemic. Primary Dealer Credit Facility to of April 20. It includes USD75 billion an additional USD322 billion for • State of emergency allows states offer overnight and term funding to in funding for hospitals and USD25 the Paycheck Protection Program, to access federal funding. primary dealers. billion in funding for COVID-19 plus an additional USD60 billion for • March 17: A Primary Market testing. SME disaster loans and grants. In Corporate Credit Facility was • A fourth relief package was drafted Early May, the disaster loans created for new bond and loan and announced by House Democrats program was so overwhelmed that issuance; a Secondary Market the week of May 11 on the order of it began only accepting Corporate Credit Facility was USD3 trillion that would include state applications from agricultural created to provide liquidity for and local government assistance, businesses. outstanding corporate bonds. On guaranteed hazard pay and childcare June 15, the Fed announced that the benefits for essential workers, SMCCF would begin buying student loan debt relief, funding for corporate bonds. COVID-19 testing, more direct cash • March 18: Established a Money- payments to households, and much Market Mutual Fund Liquidity more. The package passed the House Facility to ensure redemptions from in mid-May, but is not expected to investors can be met and help advance, although Republicans have system liquidity. expressed openness to another round • March 31: Fed announced the of stimulus. creation of an international repo Suggestions or comments? Please email us Global Policy Responses – Developed Markets Monetary Fiscal Last Updated: Rate Actions Other Measures Direct Support Credit/Loan Guarantees Other July 21 facility that will allow foreign central banks to obtain U.S. dollars overnight by exchanging their U.S. Treasury securities. At the July FOMC meeting, this facility was extended through March 2021 (originally September 2020). • Fed has established a Main Street Business Lending Program to support lending to SMEs. On June 8, the Fed announced it would expand eligibility for the program. • April 9: A Municipal Liquidity Facility will lend up to USD500 billion directly to state and local governments. On June 3, the number and type of entities eligible to use this facility was expanded. • On July 29, all lending facilities set to expire on September 30 were extended through December 31 2020. Japan • Policy rates have so far been left • BoJ stepped up purchases to • On April 7, a JPY108 trillion package • First relief package on February • Tax deadline extended from Mid- untouched at 0% - -0.1%. USD112 billion of Japanese was announced, of which, JPY39.5 13 allocated JPY500 billion for low- March to Mid-April. • At the May 11 MPC meeting, no government bonds (JPY5.4 - JPY7.4 trillion is expected to be direct interest, collateral-free loans to • The April stimulus package will changes to interest rates were trillion) and other equities (JPY6 - spending. The package includes SMEs in the tourism and other include JPY26 trillion in tax announced. JPY12 trillion). JPY300,000 per household, JPY13.9 heavily impacted industries. payment moratoriums. • At the June 16 MPC meeting, BoJ • After the April 7 stimulus package billion to stock up on flu medicines, • On March 10, a second relief announced that it expects policy announcement, BoJ announced its subsidies of JPY1 trillion for local package was announced of JPY1 rates to remain at current levels. bond purchases would be stepped governments. The package will be trillion that expanded the loan • At the July 14 & 15 MPC meeting, up again by another JPY 16 trillion to paid for by a sale of JPY18 trillion in program of the February package, no changes to interest rates were JPY145 trillion. bonds. allowing any company with sales announced. • At the April 27 MPC meeting, BoJ • On April 17, a revision was made to down 5% or more YoY over the announced that it would step up CP the April 7 package: every individual previous month to be eligible. For and corporate bond purchases, in Japan will receive JPY100,000. This those who saw business decline strengthen and expand the activities change required a spending increase 10-20%, the government will pay of the Special-Funds Supplying of JPY8.8 trillion, which the the interest on the loans. Operations to Facilitate Financing in Suggestions or comments? Please email us Global Policy Responses – Developed Markets Monetary Fiscal Last Updated: Rate Actions Other Measures Direct Support Credit/Loan Guarantees Other July 21 Response to the Novel Coronavirus, government hopes to finance through • April 7 package will allow SMEs increase purchases of Japanese the sale of JPY23 trillion in bonds. to borrow from private firms for government bonds and T-bills, and • On May 27, the government 0% interest. will actively purchase ETFs and J- announced another JPY117 trillion REITs. stimulus, JPY33 trillion of which will • At the May 11 MPC meeting, BoJ be direct spending on rent subsidies announced that it would purchase for households and SMEs, payments an amount of government bonds of JPY200,000 to frontline medical necessary to keep 10-year bond workers, and vaccine research. The yields at 0%.
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