Sovereign Capital Markets in Pandemic Times

The coronavirus pandemic presented numerous unprecedented challenges to central banks in both industrialized countries and emerging markets. The sudden global recession, the often-interrupted recovery, the displacement of labor, capital, and financial resources all required policy makers to adopt new strategies, often untested, in order to provide liquidity to the markets, reduce the cost of capital, and ultimately foster rapid economic growth --- all the while the pandemic continued to destabilize the pre-existing economic and geopolitical order. These actions raise numerous questions about their rationale and effectiveness as well as about their potential distortions on both Wall Street and Main Street --- from inflationary pressures to a liquidity glut to excessive risk-taking to volatility and financial instability.