As societies implement social distancing in response to the COVID-19 pandemic, millions of small businesses are experiencing catastrophic revenue declines and temporary closure. Governments across the world are responding with a range of programs to prevent systemwide bankruptcies.
Central banks have adapted their traditional lender-of-last-resort function, the discount window, to encourage banks to lend to small businesses. In this post, we compare four such “funding for lending” programs that we have identified in the current coronavirus crisis: Australia, the United Kingdom, Saudi Arabia, and Taiwan. We also discuss two earlier, similar programs: the Bank of England’s Funding for Lending Scheme in 2012 and Hungary’s Funding for Growth Scheme in 2013.
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