Discussion and Analysis of the Monetary Actions of the Three Central Banks to Defend Their Corresponding Economies After the Outbreak of COVID-19

Abstract

The COVID-19 pandemic jeopardized and risked the United States, China, and Pakistan’s central banks’ monetary policies, slashing 
growth, derailing recovery, and pushing the countries’ most vulnerable further into poverty and joblessness. And the economic turbulence spurred by the pandemic confronts central banks worldwide with new kinds of monetary challenges, as in Eurozone the situation is more than ever complicated because of heightened volatility emanating from a multitude of monetary policy emergency responses: central banks’ intensified bond and securities purchasing programs coupled with negative interest rates. Accordingly, the existence of cyclical trade-off between stabilizing a monetary union, tailing off expansionary monetary policy and maintaining free capital mobility underscores the importance of resolving the trilemma without jeopardizing the currency and financial stability. Furthermore, the 2020 bear market was triggered by coronavirus-induced economic uncertainties, economic fluctuations, and monetary turbulences proliferating across the global financial markets and causing economic meltdowns in most developed 
countries including the U.S. and China and developing countries like Pakistan as well.  And resultantly, the rapid economicuncertainty, and disruptions caused stock markets’ plunging into a bear market in early 2020. This needs carefully designed and result-oriented structural reforms in monetary policies by the central banks concerned to ward off the negative effects of inflation and unemployment; triggering growth rates, boosting investment and exports, stimulating stock and financial markets and strengthening economic muscles.