Economics
Emerging Market Central Banks Start Buying Bonds in Risky Shift
- Pandemic pushes many central banks to try QE for first time
- But they have to deal with a different threat: capital flight
A barber in protective gear cuts a customer's hair in Jakarta, April 28.
Photographer: Nuswantoro Manggala/Opn Images/Barcroft Media via Getty Images
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To fight the coronavirus, developing economies from Colombia to Indonesia are turning to a playbook that’s become familiar in the rich world since 2008: central banks are buying government debt.
Since February, some 13 emerging-market central banks have started snapping up bonds or said they are considering doing so, according to research from Bloomberg Intelligence. It’s a policy that carries a whole extra layer of risk in countries where currencies are fragile and capital has a history of fleeing.