The global economy will never be the same again. The coronavirus pandemic has changed the general economic structure. New time requires new rules. Economists have come to an agreement that the current situation could be described as a real revolution.
The status of central banks and the technical instruments they have been applying for many decades will be the first to undergo changes. The fact is that in democratic countries, regulators are totally autonomous and extremely powerful. However, they may lose their power under the present conditions. Moreover, governments are becoming more influential in solving monetary policy issues.
As a rule, the leading central banks have an opportunity to set the key interest rates, launch stimulus programs, and make attempts to stabilize inflation. At the moment, they have to make decisions together with countries’ authorities. Regulators are more than other institutions interested in economic support. That is why they are ready to take various measures to boost it.
Stephen King, a senior economic adviser to HSBC Holdings, supposes that central banks “have to accept in that sense they’ve lost a bit of power to the political process.” In the future this approach may result in a slower recovery amid absence of stimulating programs. However, in such desperate financial circumstances, it is necessary to cushion demand.
