(Adds new measures from China, Japan, the EU and South Korea)
March 13 (Reuters) - Policymakers and government leaders have taken a range of measures to shore up financial markets and economies in the face of a coronavirus pandemic. Here is a list of how some of the world’s biggest economies and economic blocs have reacted.
China’s central bank has cut the cash that banks must hold as reserves for the second time this year, releasing 550 billion yuan ($79 billion) to help its coronavirus-hit economy. It has already cut several of its key rates, including the benchmark lending rate, and has urged banks to give cheap loans and payment relief to exposed companies.
Beijing has also earmarked 110.5 billion yuan to fight the pandemic and has ramped up funding support for virus-hit regions.
The Bank of Japan pledged to release cash into the markets by buying 200 billion yen ($1.90 billion) of five-to 10-year government bonds and injecting a further 1.5 trillion yen in two-week loans.
Japan unveiled a second package of measures worth about $4 billion in spending to cope with the fallout of the coronavirus outbreak, focusing on support to small and mid-sized firms, as concerns mount about risks to the fragile economy.
THE EUROPEAN UNION
The European Union will establish a 37 billion euro investment initiative as part of a package of measures to cushion the bloc’s economies from the impact of the coronavirus.
The EU will also give member states flexibility on budget deficits and state aid and will gaurantee 8 billion euros in loans to 100,000 firms to support the corporate sector.
The New York Federal Reserve said it will make $1.5 trillion available for overnight lending markets and start purchasing a broader range of U.S. Treasury securities as part of its monthly purchases, a shift that signals it could deploy crisis-era tools sooner than planned. The central bank offered $500 billion in a three-month repo operation on Thursday and will offer an additional $500 billion in one-month repo and $500 billion in three-month repo loans on Friday.
It comes a day after President Trump said the U.S. Treasury Department will defer tax payments without interest or penalties for certain individuals and businesses negatively impacted, aiming to provide more than $200 billion of additional liquidity to the economy.
He also said the Small Business Administration will provide capital and liquidity to firms affected by the coronavirus by providing low-interest loans to small businesses in affected states and territories, effective immediately. And he suspended all travel from Europe, with a few exceptions, to the United States for 30 days starting on Friday.
Earlier, Trump signed a $8.3 billion emergency spending bill to combat the spread of the virus and develop vaccines for the highly contagious disease.
The U.S. Federal Reserve has cut interest rates by half a percentage point in its first emergency rate move since the height of the 2008 financial crisis. Investors expect more cuts in the weeks ahead.
South Korea’s financial regulator said on March 13 it would ban short-selling of shares listed on the main indexes for six months.
The government has also announced a stimulus package of 11.7 trillion won ($9.8 billion) to cushion the impact of the largest outbreak of coronavirus outside China. An additional 10.3 trillion won in treasury bonds will be issued this year to fund the extra budget.
EUROPEAN CENTRAL BANK
The ECB will provide banks with loans at a rate as low as minus 0.75%, below the -0.5% deposit rate, and increase bond purchases by 120 billion euros this year with a focus on corporate debt. The ECB’s bank supervisory arm will let euro zone banks fall short of some key capital and cash requirements, to keep credit flowing to the economy.
But unlike its U.S. and UK counterparts, the ECB held back on cutting rates and instead pointed the finger at euro zone governments, who have been slow in ramping up spending.
Italy has doubled the amount it plans to spend on tackling its coronavirus outbreak to 7.5 billion euros ($8.4 billion) and is raising this year’s deficit goal to 2.5% of national output from the current 2.2% target.
Payments on mortgages will be suspended across the whole of Italy and Italy’s banking lobby ABI said lenders would offer debt moratoriums to small firms and households grappling with the economic fallout from the virus.
Germany’s centre-left coalition agreed to increase public investments by 12.4 billion euros by 2024 and to make it easier for companies to claim subsidies to support workers on reduced working hours to counter the effects of the coronavirus epidemic.
Chancellor Angela Merkel’s conservatives are split over whether Germany should rush out a fiscal stimulus package to counter any impact of the coronavirus on Europe’s largest economy.
Britain launched a 30 billion-pound ($39 billion) economic stimulus plan just hours after the Bank of England slashed interest rates, a double-barrelled package aimed at warding off the risk of a coronavirus recession.
The government is allowing companies to suspend payments of some social charges and taxes, and is activating state-subsidised short-time work schemes. It has ordered the Bpifrance state investment bank to guarantee loans needed to overcome short-term cashflow problems.
Paris has also allowed companies to declare force majeure due to the outbreak if they cannot honor a contract with the public sector, and is putting pressure on big companies to show similar leniency with subcontractors.
The Reserve Bank of India (RBI) plans to infuse fresh cash liquidity into the system through a second round of long-term repo operations (LTRO), government officials told Reuters, amid fears that the coronavirus outbreak will derail any revival of economic growth.
The RBI has said it stands ready to act to maintain market confidence and preserve financial stability.
The government is, meanwhile, pushing state-run banks to approve new loans amounting to 500-600 billion rupees by the end of March, according to government sources.
Finance Minister Bill Morneau said on March 9 that the government was “looking at taking some initiatives this week,” as Canada reported its first coronavirus death, with a steep decline in oil prices expected to hit the world’s fourth-largest crude producer hard.
The Bank of Canada lowered its benchmark overnight rate to 1.25% from 1.75% in response to the epidemic, prompting money markets to price in a better-than-even chance of another reduction next month. The last time it cut by 50 basis points was in 2009 during the financial crisis.
Reporting by Reuters Staff; editing by Dan Burns, Edward Tobin and Carmel Crimmins
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