Becchetti, Leonardo and Scaramozzino, Pasquale (2020) COVID-19 debt relief. London: Centre for Financial and Management Studies, SOAS University of London.
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Abstract
The COVID-19 pandemic has been a global shock with dramatic consequences on debts of governments called to alleviate the economic and social impact of the crisis on firms and households. We explore conditions for the feasibility of (COVID-19 generated) government debt relief, justified in principle by the exogenous characteristics of the shock. We outline several technically and economically feasible ways (involving debt “freezing”, debt rescheduling or outright debt cancellation) for achieving this goal and discuss their consequences on moral hazard and the Central Bank balance sheets, as well as their potential impact on CB’s independence, reputation and, ultimately, on inflation and exchange rates. We also discuss the distributive concerns which arise when a CB (as in the Eurozone) operates in a Union with several sovereign member states.
| Item Type: | Monographs and Working Papers (Working Paper) |
|---|---|
| Keywords: | Covid, sovereign debt |
| SOAS Departments & Centres: | Departments and Subunits > School of Finance & Management SOAS Working Papers |
| Subjects: | H Social Sciences > HJ Public Finance |
| Date Deposited: | 06 Jan 2021 18:59 |
| URI: | https://eprints.soas.ac.uk/id/eprint/34668 |
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