Mobilizing Development Banks to Fight COVID-19
By Stephany Griffith-Jones , Régis Marodon, José Antonio Ocampo
There is no historical precedent for the current worldwide shutdown of most “non-essential” economic activities in response to the COVID-19 pandemic. Nor do policymakers have any experience of trying to engineer a smooth recovery after a shock of this magnitude. Clearly, however, governments now need to take responsibility. With markets having vanished or sharply contracted, the public sector has become the lifeline for millions of people and companies in distress.
Both developed and developing countries urgently need large-scale counter-cyclical funding to help maintain economic activity, and especially jobs. And one of the key instruments that most governments and the international community have to help achieve this are development banks. These institutions can significantly leverage public resources to help minimize economic decline, support recovery, and finance structural transformation.
Development banks operating on a national, regional, or global scale are frequently overlooked even by financial specialists. But there are more than 400 of them, with combined assets of more than $11 trillion, according to the French Development Agency (AFD), equivalent to roughly 70% of the assets of the entire US banking sector.
Photo courtesy of martaposemuckel.