Two Ex-Fed Officials Have a Faster Way to Distribute Money in Recession
Julia Coronado and Simon Potter say recession insurance bonds could activate payments and bypass political wrangling in a crisis.
A closed nail salon in the Williamsburg neighborhood in the Brooklyn borough of New York.
Photographer: David Dee Delgado/BloombergThe coronavirus pandemic that shut down economies around the globe showed how crucial—and difficult—it is to get money swiftly to people who need it most in a crisis. Former central bank officials Simon Potter, who led the Federal Reserve Bank of New York’s markets group, and Julia Coronado, who spent eight years as an economist for the Fed’s Board of Governors, are among the innovators brainstorming solutions. They propose creating a monetary tool that they call recession insurance bonds, which draw on some of the advances in digital payments. Coronado, president and founder of MacroPolicy Perspectives LLC, and Potter, nonresident senior fellow at the Peterson Institute for International Economics, spoke with Bloomberg Markets to explain their idea.
BLOOMBERG MARKETS: How would recession insurance bonds work?