The Guardian view on the Covid-19 fight: it can be paid for | Editorial
The Bank of England is right to step in to fund the Treasury's coronavirus stimulus package, because there are more important things to worry about than government debt
When the Bank of England's new governor, Andrew Bailey, was appointed in December, this column asked him to "leave behind orthodox thinking" and embrace radical ideas. We advocated that the Bank defy conventional Treasury wisdom to deal with coming crises of the modern age by funding any required government stimulus. This paper can claim no special foresight of the coronavirus pandemic, but it is encouraging that Mr Bailey has largely taken our advice.
What the governor's action reveals is that one arm of government, the central bank, is funding another, the Treasury. This is not novel. Monetary financing is functionally equivalent to issuing bonds and then buying them back using quantitative easing. The only difference is that the bank owns the balance rather than the bonds. Yet the rubicon has been crossed, again. The governor would not say so - because this is not what respectable central bankers admit.
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