Introduction

After the 2008 global financial crisis, which is described as one of the most important economic disasters in the world history, there were debates about what the role of central banks should be, and in this context, many economists agreed that the pre­crisis central banking paradigm was insufficient.

While the paradigm shift in central banking after the global economic crisis made its effects felt again after every unpredictable development such as natural disaster and epidemic, we observe that the novel coronavirus (COVID-19) emerging in China recently shaped monetary policies. The spreading of problems in any country to the whole world as a result of globalization in this period also brought with it that the central banks to be alert to all kinds of economic downturns and also to support the markets by opening up “room for manoeuvre” in monetary policy and resorting to unconventional methods.

In this process, which brings the widespread use of concepts such as quantitative easing and negative interest, the concerns that unforeseen developments would lead to a slowdown in economic activities beyond expectations and the risk of deflation were prevalent.

At this point, concerns about the impact of COVID-19, which emerged in China and spread rapidly around the world, on global trade are on the agenda of central banks. Central banks, which took many measures together aggressively during the epidemic, took measures to increase liquidity through various channels in order to support sectors, businesses and individuals in difficulty. In this context, the US Federal Reserve (Fed), the European Central Bank (ECB), the Bank of Japan (BoJ), Bank of China (PBoC) and the Bank of England (BoE) as leading central banks, as well as many countries including Turkey, followed the epidemic closely and took quick steps through extraordinary meetings.

While the main framework of the moves made in this process is to keep the liquidity abundant by creating a low interest environment, it can be summarized as providing the banks with necessary flexibility to open credit channels and support the tradesmen and individuals. The quantitative easing, which was first applied by the Chairman of Fed, Ben Bernanke, during the 2008 global financial crisis, was one of the main policies applied during the epidemic. On the other hand, facilitating the access of countries to dollars and euros through swap agreements was among the policies implemented.

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