Republican $1tn plan, Paul Tucker on damage limits

·11 min·1 clip

Republicans propose a $1 trillion stimulus as former Bank of England deputy governor Paul Tucker warns central banks must adopt a wartime footing.

The episode opens with news of a Republican Senate plan for a fiscal stimulus exceeding $1 trillion, including $1,200 payments to adults and $500 per child, with income caps. It then shifts to Europe, where Italian Prime Minister Giuseppe Conte calls for the EU to use the 500 billion euro European Stability Mechanism. The core of the episode is an interview by FT's Gillian Tett with Sir Paul Tucker, former Bank of England deputy governor and chair of the Systemic Risk Council. Tucker emphasizes that central banks must keep financial systems operating by using discount windows and supporting repo and commercial paper markets, potentially acting as market makers. He advocates for banks to immediately suspend equity buybacks and dividends, putting the banking system on a 'wartime footing'. Tucker criticizes regulators for failing to address leverage in the shadow banking sector, which has exacerbated market volatility. He also discusses the strategic implications of massive government debt issuance, suggesting debt should be held by 'friendly' domestic or foreign institutions rather than through what he dismisses as 'Toytown' helicopter money. The episode concludes with a report on Rising Pharmaceuticals raising the price of chloroquine, a drug being tested for COVID-19, by nearly 100%, and a correction regarding FDA approval. The host invites listener contributions on workplace impacts of coronavirus and promotes another FT podcast.

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