The measures taken by the governments of the infected countries have taken the edge off the onslaught of the virus. Of course, that could not contain the virus as new cases are being reported every day. Their measures could not pacify the people enough and keep them from panicking
Any disaster or outbreak of disease tests our efficiency in handling it. At the same time it provides some opportunities to take lessons from them. The global fight against coronavirus is no exception.
With the global economy getting a beat down by the deadly coronavirus, the World Bank, IMF and central banks in different countries have announced special measures to keep people and the financial markets in relatively good health so the path to recovery is swift after all of it is over.
The World Bank made $12bn and the IMF made $50bn available for fighting the virus. In the USA, the Congress is allocating $8.3bn funding to bolster the government's fight against the virus.
The US Federal Reserve, on March 3, cut rates a fortnight before declaring its monetary policy to reassure the nervous businesses community. The Central bank of Australia, Canada and Indonesia have also taken actions to keep the monetary situation stable in their own ways.
The Bank of England has cut interest rate and the European Central Bank is expected to adjust their monetary policy anytime too.
The measures taken by the governments of the infected countries have taken the edge off the onslaught of the virus. Of course, that could not contain the virus as new cases are being reported every day. Their measures could not pacify the people enough and keep them from panicking. Supermarket shelves have been emptied of cleaning products, toilet tissue, water, soaps and even food items. Pharmacies have been cleaned of hand sanitisers, room sanitisers and other meds.
The lack of confidence caused a panic that led the global markets to plunge two days ago, weakening further the health of the global economy already infected by the virus that disrupt the global supply chain.
The biggest fall was in the USA financial markets. The level of people's trust in the government is worryingly low, still 59 percent, according to a last June polling by Wellcome Trust, a charity.
Even though the next day the global markets moved back from the abyss, question remains whether it can avert experiencing the same precariousness amid the dangerous lack of confidence.
Our central bank is no different. It has taken special package though before the outbreak of the virus to cure the ailing health of our stock market.
A month ago, it issued a circular offering policy support to the banks to encourage them to invest in the market.
Out of 59 banks, only five--two state owned and three private banks have created Tk. 1000 crore fund, each using Tk.200 crore for the purpose.
Eight more banks– Bank Asia, NCC, Mercantile, Islami, NRB, National, Janata and Agrani – are in the process of building the funds to be invested in stocks.
The lukewarm response from the banks prompted the central bank to ask top executives of all commercial banks over telephone to intensify their efforts to build fund for the stock market.
The same day, on Tuesday, Dhaka Stock Exchange Board also sat with representatives of all listed banks to discuss the banks' reluctance to avail the facility by creating a fund with their own money or taking repo at 5 percent from the central bank.
It is common in economy that when bank interest rate declines, the capital market gets a boost. And due to interest rate cap, banks now have an excess liquidity to build the fund.
But, investors remain shy. The main reason here is their lack of confidence in the market. And the reason is strong enough.
The day before they were asked by the central bank and the DSE to expedite the process to create the fund, Dhaka stocks plunged 279 points or 6.5 percent-- the biggest ever single-day fall since the country's premier bourse launched its new key index in January 2013.
Detection of three coronavirus patients in Bangladesh added new causes for Monday's fall.
In such a situation, it is difficult to say with any confidence that the latest moves by the central bank and Dhaka Stock Exchange Board's urging the banks to expedite their process to invest in stocks would help the stock market bounce back.
At the end of the day, trust matters everywhere. Be it in conjugal life or in the economy. For building trust in the national level we need to build healthy institutions, be it political or financial.