海角大神

The COVID-19 pandemic is certainly global but so has been the economic fallout. An estimated 81% of the world鈥檚 workforce has been idled. The response to both crises has largely been led by each nation鈥檚 government. People naturally look to their civic leaders for solutions. In the United States, that is true 鈥� except for one institution that has had to do far more.

Starting in mid-March, the Federal Reserve decided to go beyond its mandate as America鈥檚 central bank in ensuring adequate job growth and safe inflation. With its ability to take on debt 鈥� more than $4 trillion in recent weeks 鈥� it launched unprecedented programs to rescue both Wall Street and Main Street from the loss of customers and investments caused by the mass lockdown.

The Fed鈥檚 motive was clear: 鈥淧eople are undertaking these sacrifices for the common good. We need to make them whole,鈥� said Fed Chairman Jerome Powell in early April.

鈥淲e should be doing that, as a society. They didn鈥檛 cause this. Their business isn鈥檛 closed because of anything they did wrong. They didn鈥檛 lose their job because of anything they did wrong.鈥�

It turned out, however, that the Fed鈥檚 sentiment toward making Americans whole led to a decision to help others achieve the same.

With much of the world reliant on the U.S. dollar for international commerce, the Fed also had to deal with a panic in global financial markets. All at once in March, both individuals and governments were seeking economic safety by trying to buy greenbacks, long the world鈥檚 most stable currency.

The panic was like a bank run, one with potential blowback on the American economy. The global dash for cash hit a record, according to the Institute of International Finance. In addition, the financial consequences also threatened to hurt the struggle against the coronavirus in many countries that couldn鈥檛 pay their bills.

On the world stage, the Federal Reserve was suddenly seen as indispensable. On March 15, it opened up 鈥渟wap lines鈥� with 14 foreign central banks. This allowed them to inject additional dollars into their economies, allowing a currency liquidity that would help quell financial fears.

But that was not enough. Later, nine more countries were given access to dollars. By March 31, many more countries were included in a special program to let them 鈥渞epurchase鈥� dollars. With its great advantage as keeper of the preferred currency, the U.S. had to recognize its responsibility to the rest of the world.

Today, much of the world economy still faces a severe slowdown. Yet the financial panic is largely gone. The Fed鈥檚 decision to be an emergency backstop for the world, not just for the U.S., was critical. By lifting up others abroad, it prevented a worse situation for Americans.

When so many nations were looking inward during the crisis, the Fed鈥檚 actions are a reminder of a universal call to make people 鈥渨hole.鈥�