International Financial Architecture

Policy Area
International Financial Architecture

POLICY BRIEFS

Policy Briefs contain recommendations or visions and cover policy areas that are of interest to G20 policymakers. The majority of the Policy Briefs has been developed by a corresponding T20 Task Force.


T20 Recommendations Reports tie related policy proposals made under different G20 Presidencies into a common policy advice framework. They aim to leverage connections between T20 research organizations as well as other stakeholders to address well-defined global problems, in order to support G20 policymakers and to aid business and civil society organizations in complementing G20 policy efforts.

  • COVID-19 and Global Capital Flows

    The COVID-19 crisis has triggered major disruptions for exchange rates and global capital flows.•Cross-border portfolio investment stopped in many emerging markets as well as in some advanced economies in March 2020.•Countries have not had to resort to capital controls. To support foreign currency liquidity, several emerging markets have intervened inthe foreign exchange market and relaxed rules on capital inflows.

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  • EU solidarity in exceptional times: Corona transfers instead of Coronabonds

    The countries hit hardest by the COVID-19 crisis already have too much debt. Lending from the European Stability Mechanism or via Coronabonds would add to that debt, potentially making it unsustainable. This column suggests that European solidarity should take the form of transfers, not credit. A substantial transfer could be organised via the EU budget simply by exempting the weakest countries from their contributions to the EU budget for the duration of the programming period 2012-2027.

    EU Solidarity in Exceptional Times: Corona Transfers instead of Coronabonds

    By Daniel Gros (CEPS)

     

  • The Helicopters Are Coming

    With the economic situation in many advanced economies rapidly deteriorating, policymakers are rolling out unprecedented stimulus programs, setting the stage for what amounts to a massive experiment with hitherto unorthodox Modern Monetary Theory. Today’s extraordinary problems, it would seem, require extraordinary solutions.

    The Helicopters Are Coming

    By Willem H. Buiter (Columbia University)

  • This is what the economic fallout from coronavirus could look like

    The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression. In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualized rate of 10% or more. But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialized in three weeks.

    This is what the economic fallout from coronavirus could look like

    By Nouriel Roubini (Stern School of Business)

  • The Greater Trade Collapse of 2020: Learnings from the 2008-09 Great Trade Collapse

    World trade experienced a sudden, severe, and synchronised collapse in 2008 – the steepest drop in recorded history, and the deepest fall since the Great Depression. This column argues that 2020 will show a trade collapse that is far larger since the ‘COVID concussion’ is both a demand shock and a supply shock while the 2008-09 collapse was driven mostly by a demand shock. Key learnings from the last Great Trade Collapse are highlighted.

    The Greater Trade Collapse of 2020: Learnings from the 2008-09 Great Trade Collapse

    By Richard Baldwin (Graduate Institute Geneva)

  • Will COVID-19 Remake the World?

    No one should expect the pandemic to alter – much less reverse – tendencies that were evident before the crisis. Neoliberalism will continue its slow death, populist autocrats will become even more authoritarian, and the left will continue to struggle to devise a program that appeals to a majority of voters.

    Will COVID-19 Remake the World?

    By Dani Rodrik (Harvard University – Kennedy School of Government)

  • The fiscal response to the economic fallout from the coronavirus

    The various lock-down measures in response to coronavirus have halted economic activity in certain sectors and harshly disrupted others. The resulting job losses and bankruptcies are likely to create major economic strains for millions in Europe and worldwide.

    In the euro area, the European Central Bank has reacted with strong monetary policy and supervisory measures announced on 12 and 18 March 2020. Governments throughout the European Union have started to announce and implement various fiscal measures to contain the economic fallout. European state aid rules and fiscal rules have been suspended.

    In this dataset we summarise and compare the discretionary fiscal responses of EU countries, the United Kingdom and the United States. We consider only adopted measures. Other measures under discussion will be added to our comparison when adopted.

    The fiscal response to the economic fallout from the coronavirus

    By Julia Anderson, Enrico Bergamini, Sybrand Brekelmans, Aliénor Cameron, Zsolt Darvas, Marta Domínguez Jíménez (Bruegel)

  • Supply and Demand Shocks in the COVID-19 Pandemic: An Industry and Occupation Perspective

    We provide quantitative predictions of first-order supply and demand shocks for the US economy associated with the COVID-19 pandemic at the level of individual occupations and industries. To analyze the supply shock, we classify industries as essential or non-essential and construct a Remote Labor Index, which measures the ability of different occupations to work from home. Demand shocks are based on a study of the likely effect of a severe influenza epidemic developed by the US Congressional Budget Office. Compared to the pre-COVID period, these shocks would threaten around 22% of the US economy’s GDP, jeopardise 24% of jobs and reduce total wage income by 17%. At the industry level, sectors such as transport are likely to have output constrained by demand shocks, while sectors relating to manufacturing, mining and services are more likely to be constrained by supply shocks. Entertainment, restaurants and tourism face large supply and demand shocks. At the occupation level, we show that high-wage occupations are relatively immune from adverse supply and demand side shocks, while low-wage occupations are much more vulnerable. We should emphasize that our results are only first-order shocks – we expect them to be substantially amplified by feedback effects in the production network.

    Supply and Demand Shocks in the COVID-19 Pandemic: An Industry and Occupation Perspective

    By Anton Pichler, François Lafond, J. Doyne Farmer, R. Maria del Rio-Chanona, Penny Mealy (University of Oxford – Institute for New Economic Thinking)

  • A Coordinated, Unlimited and Flexible Insurance Policy to Respond to the Pandemic

    The COVID-19 global pandemic has the potential to trigger a systemic economic crisis. A coordinated and rapid International (and European) response is essential. This analysis details the economic policy objectives that should form part of the response and its toolkit in the areas of monetary, fiscal and trade policy. Governments must be on the front line of this economic battle, working in close alignment with the steps taken by the health system to fight the pandemic, providing a coordinated, unlimited and flexible insurance policy to minimise the economic impact.

    A Coordinated, Unlimited and Flexible Insurance Policy to Respond to the Pandemic

    By Gonzalo García-Andrés (Elcano Royal Institute)