Policy responses to the corporate solvency problem in the ongoing Covid-19 crisis
Andrew Bailey, Douglas J. Elliott, Victoria Ivashina 21 January 2021
Around the world, the coronavirus pandemic is pushing many firms towards insolvency by dramatically changing consumption patterns and business operations. The first wave of liquidity-focused policy responses in many jurisdictions prevented or delayed more severe consequences for the corporate sector. While some liquidity support is still needed, the crucial issue that must be tackled now is that of corporate solvency.
The corporate solvency problem
A wave of corporate bankruptcies would mean the loss of potentially millions of jobs, accompanied by economic damage, inefficiencies, and