The COVID-19 pandemic has created an unprecedented symmetric shock worldwide. The main challenge is promptly addressing the reduction in incomes and jobs in order to reduce the short-term losses and to compensate for missing income and growth in the future.
We present three proposals:
- To establish an exceptional financial instrument, for economies worldwide, which is a special emission of a 1,000 billion special drawing rights distributed to the International Monetary Fund (IMF) member countries. This special emission is aimed at financing the eventual imbalances of the balance of payments of the poor and emerging market countries.
- A special national issue of bonds is launched and subscribed by the major Central Banks of IMF countries, worth 10% of world gross domestic product (GDP), with a 99-year maturity and 0.01% interest. They are guaranteed by the signature of the Group of Twenty (G20), which shall provide the world and the international financial community the necessary impetus for the required solidarity to face the COVID-19 pandemic.
- To establish a global coordination mechanism among central banks, aimed at avoiding global spill over problems. The G20 might be a good forum to achieve global coordination among central bank policies.
