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HM Treasury has announced this morning (April 9th) that the UK has temporarily extended the Ways and Means facility (the government's overdraft with the BoE) in order to fund the fight against the COVID-19 pandemic. As I understand it, this allows the government to obtain cash directly from the Bank of England, without having to rely on the bond market; although the statement does say that "The government will continue to use the markets as its primary source of financing".

Is my understanding of the measure correct, and is this move equivalent to measures taken in post-WWI Germany and Zimbabwe, as suggested by the Telegraph? What are the implications of such a move?

  • Frankly you'd better ask this on econ SE. Here chances are you'll get a lot of opinionated commentary... and not much more. (As it happened on a similar question of yours.) – Fizz Apr 9 at 9:50
  • @Fizz I'm more interested in the political implications though, as opposed to just a solely economics-based explanation. It could fit there as well though, I suppose. – CDJB Apr 9 at 9:54
  • Then remove "is this basically equivalent to printing money?" because that is a troll-magnet. – Fizz Apr 9 at 9:55
  • @Fizz I'm genuinely interested as to what the difference is though, but if you really think that that is likely to attract trolls then feel free to alter that. – CDJB Apr 9 at 9:56
  • On econ SE there are quite a few of those questions. At least there there's enough mass of experts to downvote the nonsense. Here, past experience with the econ questions has shown me the opposite is the case. You''ll get "shoot from the hip" answers that will get tons of HNQ upvotes, despite being factually wrong (on questions like this). – Fizz Apr 9 at 9:57

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