How “Monetization” Really Works—Examples from Nations’ Policy Responses to COVID-19

Abstract

The coronavirus disease (COVID-19) has forced governments to provide stimulus packages amid falling tax revenues, prompting debate on “monetization” of government debt. Drawing on selected country experiences, this paper shows through actual central bank operations and accounting that “monetization,” commonly equated with “printing money,” is operationally impossible and that inflationary concerns are misplaced.