Central banks were the first economic responders to the Covid-19 pandemic. From Washington to Wellington, policy makers swiftly deployed tools developed during the global financial crisis and found new ways to shore up credit markets vital to the functioning of modern commerce.
Learning from the 2007-2009 fiasco, they moved with great speed and scope. Monetary authorities were aided by their independence: They had credibility with investors and businesses that allowed them to take bold steps and weren’t subject to the political horse trading and delays that usually come with fiscal stimulus. But some lessons may have been taken too far. Do central banks have too much clout and shape policy too expansively in too many areas? If so, does that imperil the very autonomy that makes them so effective? Christina Parajon Skinner, an assistant professor at the University of Pennsylvania’s Wharton School and former legal counsel at the Bank of England probes these questions extensively in her “Central Bank Activism” paper, scheduled to be published next month in the Duke Law Journal.
Central Banks Can Do a Lot Fast. Will It Be Their Downfall? - Bloomberg
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