South Korea central bank to infuse cash via 'unlimited' repos for first time

SEOUL (REUTERS) – South Korea’s central bank said on Thursday (March 26) it will temporarily offer an unlimited amount of money for three months through repo operations, an unprecedented move to funnel cash to money markets hammered by the coronavirus pandemic.

Repo auctions will be held every week, where a wider range of financial institutions will be able to borrow funds at the repo rate of no higher than 0.85 per cent, the BOK said in a statement.

The BOK also said it would accept a wider range of collateral including notes issued by state-run companies in the repo auctions – where central banks lend money to commercial banks and brokerages who can deposit government debt as collateral.

Thursday’s news follows similar policy moves by central banks around the world as policymakers race to bolster stimulus to tackle the economic and financial impact of the coronavirus.

On Monday, the US Federal Reserve pledged to back purchases of corporate bonds and buy unlimited amounts of Treasury bonds for the first time to ensure credit flows to corporations and local governments.

The BOK too is entering unchartered territory by pledging to offer an ‘unlimited demand’ for liquidity from domestic markets, after slashing interest rates by 50 basis points to 0.75 per cent on March 16 in its largest policy easing since the global financial crisis.

It is also working in tandem with the government, after President Moon Jae-in on Tuesday doubled a planned economic rescue package to 100 trillion won (S$118 billion) to save companies hit by the coronavirus and put a floor under crashing stocks and bond markets.

“Through this (repo operations), we will be supplying enough money to the government’s 100 trillion won rescue package programmes,” the BOK said.

The cost of raising US dollars by swapping the South Korean won surged to the highest since the global financial crisis earlier this month while the spread between corporate bonds and treasury debt has been widening, in a sign of tightening money market conditions.

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Government wins unanimous consent to pass emergency COVID-19 legislation

The government won unanimous consent to quickly pass emergency legislation to free up $82 billion to help Canadians weather the COVID-19 crisis.

After a day of tense negotiations, MPs began debating the bill in the wee hours of morning, with a vote planned within a couple of hours.

The motion sent to the Speaker stated the House would resolve itself into a committee for no more than an hour to consider the matter with members getting up to five minutes for a question, and will be adjourned until April 20 after the third reading.

Starting the week of March 30, the finance minister will give a biweekly report on all actions undertaken to the pandemic, and will be discussed on April 20.

The Standing Committee on Finance will begin a review of the COVID-19 Emergency Response Act within six months of the day on which the it receives royal assent and will report its findings to the House no later than March 31, next year.

The motion also said that unless the Speaker received a notice from the House leaders of all four recognized parties it would remain adjourned until a future date.

Conservatives raised objections to what they dubbed a Liberal “power grab,” which led to a late-night discussion and early hours of Wednesday.

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Italian PM says EU must use 500 billion euro rescue fund during virus outbreak – FT

(Reuters) – Italian Prime Minister Giuseppe Conte said in an interview that the European Union must use “the full firepower” of its 500 billion euro ($534.10 billion) rescue fund to confront Europe’s economic crisis during the coronavirus outbreak.

The Italian Prime Minister told the Financial Times newspaper that monetary policy alone is insufficient to combat the problem.

“Monetary policy alone cannot solve all problems; we need to do the same on the fiscal front”, Conte said.

“The route to follow is to open ESM (European Stability Mechanism) credit lines to all member states to help them fight the consequences of the COVID-19 epidemic,” he added.

Italy’s death toll from coronavirus overtook that of China, where the virus first emerged, on Thursday as hospitals said they were being overwhelmed and the government prepared to prolong emergency lockdown measures.

A total of 427 deaths were registered in Italy over the past 24 hours, bringing the total nationwide tally to 3,405 since the outbreak surfaced on Feb. 21.

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