The gravity of the Covid-19 crisis has encouraged long lists of policy interventions, and shorter lists of how these should be prioritised or financed. Given SA’s serious fiscal constraints, the belief that the SA Reserve Bank’s balance sheet offers a cost-free alternative to funding these priorities is not only deeply misguided — it is dangerously widespread.

As policymakers prepare to deploy the full arsenal of policy tools in the fight against the economic devastation of the coronavirus pandemic and lockdowns, discussions around the role of so-called “balance-sheet policies”, including quantitative easing (QE), by the Reserve Bank are intensifying...

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