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20/3/20: $4.6 trillion and counting: the scale of Monetary Easing

Summary:
The monetary largesses to-date: Central Banks across the world have slashed interest rates in the past few weeks, provided additional emergency liquidity supports for the markets, ranging from equity markets to bond markets to municipal debt markets and money markets. They also announced trillions worth of direct asset purchasing and debt monetization programs. Ex-international / multinational lines and direct swaps lines, total amounts of monetary and financial channels supports deployed so far is around USD 4.582 trillion. This number also excludes open-ended (unbounded) measures, such as programs to purchase securities to guarantee specific price/yield ranges.Here is the summary of these (and direct Government lending) programs to-date:20/03/2020  Banco de México: rate cut bps = -50,

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The monetary largesses to-date: Central Banks across the world have slashed interest rates in the past few weeks, provided additional emergency liquidity supports for the markets, ranging from equity markets to bond markets to municipal debt markets and money markets. They also announced trillions worth of direct asset purchasing and debt monetization programs. Ex-international / multinational lines and direct swaps lines, total amounts of monetary and financial channels supports deployed so far is around USD 4.582 trillion. This number also excludes open-ended (unbounded) measures, such as programs to purchase securities to guarantee specific price/yield ranges.

Here is the summary of these (and direct Government lending) programs to-date:

  • 20/03/2020  Banco de México: rate cut bps = -50, base rate = 6.50, overnight interbank rate.
  • 20/03/2020  National Bank of Romania: rate cut bps = -50, base rate = 2.00
  • 20/03/2020  Bank of Thailand rate cut bps = -25, base rate = 0.75
  • 20/03/2020  Norges Bank (Norway) rate cut bps = -75, base rate = 0.25
  • 19/03/2020  Central Reserve Bank of Peru rate cut bps = -100, base rate = 1.25
  • 19/03/2020  Bank of England rate cut bps = -15, base rate = 0.1, added GBP 200 billion to bond buying programme raising it to GBP 645 billion. On 17/03/2020: the U.K. Government unveiled another, larger stimulus package. It includes, among other things USD 379 billion in business loan guarantees, USD 23 billion in business tax cuts and grant funding to businesses hit worst by the virus, such as retail and hotel businesses
  • 19/03/2020  South African Reserve Bank rate cut bps = -100, base rate = 5.25
  • 19/03/2020  Taiwan Central Bank rate cut bps = -25, base rate = 1.125
  • 19/03/2020  Bank Indonesia rate cut bps = -25, base rate = 4.5
  • 19/03/2020  Philippine Central Bank cut bps = -50, base rate = 3.25
  • 19/03/2020  Reserve Bank of Australia cut bps = -25, base rate = 0.25, set a target for the yield on 3-year government bonds at ~0.25%, plans to purchases bonds in the secondary market do sustain yield around 25 bps; provided a 3-year funding facility to the banks at a fixed rate of 0.25%
  • 18/03/2020  Central Bank of Brazil cut bps = -50, base rate = 3.75
  • 18/03/2020  Bank of Ghana cut bps = -150, base rate = 14.50
  • 18/03/2020  Central Bank of Iceland cut bps = -50, base rate = 1.75
  • 18/03/2020 Federal Reserve Bank of the U.S. announced the Money Market Mutual Fund Liquidity Facility (MMLF), to lend money to banks so they can purchase assets from money market funds. The U.S. Treasury will cover up to USD 10 billion of loan losses from this program, and lending under the program will not effect bank capital requirements. The program is scheduled to run until the end of September. This is similar to the AMLF program launched in 2008 after the collapse of Lehman Brothers.
  • 17/03/2020 French Government announced a guarantee on bank loans to businesses up to USD 327 billion
  • 17/03/2020  National Bank of Poland cut bps = -50, base rate = 1.00
  • 17/03/2020  Central Bank of Armenia cut bps = -25, base rate = 5.25
  • 17/03/2020  Bank Al-Maghrib, Marocco cut bps = -25, base rate = 2.00
  • 17/03/2020  State Bank of Pakistan cut bps = -75, base rate = 12.50
  • 17/03/2020  Central Bank of the Rep. of Turkey cut bps = -100, base repo rate = 9.75
  • 17/03/2020  State Bank of Vietnam cut bps = -100, base refinancing rate = 5.00, cut bps = 50, base discount rate 3.50
  • 17/03/2020 Federal Reserve Bank of the U.S.: U.S. Treasury Secretary Mnuchin approved the Federal Reserve's "Commercial Paper Funding Facility" (CPFF) which allows the Fed to create a corporation which can purchase commercial paper, short-term, unsecured loans made by businesses for everyday expenses. Mnuchin authorized up to USD 10 billion from the U.S. Treasury to help cover loan losses incurred under this program. The program will end on March 17, 2021 unless it is extended. The program is similar to the one launched after the Global Financial Crisis. On the same day, the Federal Reserve received approval to re-launch another Great Recession-era tool, the Primary Dealer Credit Facility (PDCF). PDCF will offer short-term loans to banks secured by collateral such as municipal bonds or investment-grade corporate debt. The program will run at least six months and can be extended.
  • 16/03/2020 Federal Reserve Bank of the U.S. increased reverse repo operations by another $500 billion to USD 2 trillion
  • 16/03/2020  Central Bank of Jordan cut bps = -100, base rate = 2.50
  • 16/03/2020  Central Bank of Chile cut bps -75, base rate = 1.00
  • 16/03/2020  Central Bank of Egypt cut bps -300, base overnight rate = 10.25; cut bps = -300, base overnight deposit rate = 9.25
  • 16/03/2020  Czech Central Bank, cut bps = -50, base rate = 1.75
  • 16/03/2020  Central Bank of Bahrain, one week deposit rate, cut bps = -75, rate =1.00
  • 16/03/2020  Qatar Central Bank, cut bps = 50, base repo rate = 1.00
  • 16/03/2020  Saudi Arabian Monetary Authority, cut base repo rate = -75 bps, to rate = 1.00
  • 16/03/2020  Central Bank of Sri Lanka, cut base deposit rate to 6.25 and standing lending rate to 7.25
  • 16/03/2020  Bank of Korea cut 50 bps to the base rate of 0.75
  • 16/03/2020  Bank of Japan: short term rate -0.1%, long term 10-year JGB yield target at 0%; raised purchases of exchange-traded funds (ETFs) x2 from USD 56 billion a year to USD 112 billion for ETFs and for other risky assets, including commercial paper, created new loan program for 1 year at zero rate for financial institution.  
  • 16/03/2020  Reserve Bank of New Zealand, cut bps = -75, base rate = 0.25
  • 16/03/2020 Bank of Canada: the Office of the Superintendent of Financial Institutions (OSFI), Canada's financial regulatory body, lowered bank reserve requirements, allowing banks to lend an additional USD 214 billion
  • 15/03/2020  Federal Reserve of the U.S., cut bps = -100, base rates 0-0.25 range, will purchase at least USD 700 billion of securities, including at least $500 billion of U.S. Treasuries and at least $200 billion of mortgage-backed securities
  • 13/03/2020 Germany authorizes state-owned KfW bank, to lend out as much as USD 610 billion to companies to cushion the effects of the coronavirus
  • 13/03/2020  Bank of Canada, cut bps = -50, base rate = 0.75
  • 13/03/2020  Norges Bank, Norway, cut bps = -50, base rate = 1.00
  • 13/03/2020 People's Bank of China: lowered the banks' reserve requirement ratio by 0.5-1 percentage points to free USD79 billion worth of new lending
  • 12/03/2020 Federal Reserve Bank of the U.S. massively expanded reverse repo operations, adding USD1.5 trillion of liquidity. Effectively, the Fed extended the amount of short term loans to banks in an attempt to stabilize money markets and increase banks' access to cash.
  • 12/03/2020  European Central Bank, deposit rate remains = -0.50%, cut TLTROIII rate by 25 bps to -0.75% (TLTROs are Targeted Long-Term Refinancing Operations providing negative cost loans to banks); later added to its 2019-announced asset purchase programme of EUR 20 billion a month: a one-off EUR 120 billion purchases in 2020 on top of EUR240 billion already planned, plus another EUR 750 billion in a Pandemic Emergency Purchase Programme. Purchases total planned for 2020 is at EUR 1.1 trillion.
  • 11/03/2020  Bank of England, cut bps = -50, base rate = 0.25, also introduced a new programme for cheap lending and reduced a capital buffer requirements for the banks. Lowered capital requirements for U.K. banks, allowing them to use a "counter-cyclical capital buffer". Facilitating nearly USD 390 billion in new loans.
  • 11/03/2020  National Bank of Serbia, cut bps = -50, base rate = 1.75
  • 11/03/2020  Central Bank of Iceland, cut bps = -50, base rate = 2.25
  • 05/03/2020  Central Bank of Jordan, cut bps = -50, base rate = 3.50
  • 04/03/2020  Bank of Canada, cut bps = -50, base rate = 1.25
  • 04/03/2020  Hong Kong Monetary Authority, cut bps = -50, base rate = 1.50
  • 04/03/2020 and 03/03/2020: People's Bank of China expanded its reverse repo operations by USD 71 billion and USD 174 billion, respectively.
  • 03/03/2020  Federal of the U.S., cut bps = -50, base rates range = 1.00-1.25. Largest cut since 2008
  • 03/03/2020  Central Bank of Malaysia, cut bps = -25, base rate = 2.50
  • 03/03/2020  Reserve Bank of Australia, cut bps = -25, base rate = 0.50
  • 20/02/2020  Bank of Indonesia, cut bps = -25, base rate = 4.75
  • 20/02/2020  People's Bank of China, cut bps = -10, base rate = 4.05 for 1 year loan prime rate and 5-year rate from 4.80% to 4.75%.
  • 06/02/2020  Philippine Central Bank, cut bps = -25, base rate = 3.75
  • 05/02/2020  Bank of Thailand, cut bps = -25, base rate = 1.00

Multinational efforts:
 

  • The Fed, along with the ECB, Bank of Canada, Bank of England, Bank of Japan and the Swiss National Bank also agreed to offer three-month credit in U.S. dollars on a regular basis and at a rate cheaper than usual.
  • 04/03/2020 the International Monetary Fund made USD 50 billion in loans available to deal with the coronavirus, including USD10 billion of zero-interest loans to the poorest IMF member countries. 16/03/2020 the IMF said it, "stands ready to mobilize its USD 1 trillion lending capacity to help our membership." In the same statement, the IMF said it has $200 billion in current lines of credit, some of which could be used for the COVID crisis, and that they have "received interest from about 20 countries and will be following up with them in the coming days." The IMF also is aiming to boost its debt relief fund to $1 billion from its current level of $400 million.
  • 03/03/2020 the World Bank announced an initial package of up to USD 12 billion in loans for countries to help cope with the effects of the COVID19. USD 8 billion of the funding is new loans and the remaining USD 4 billion is redirected from current lines of credit.

 

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