Brookings Institution Webinar on COVID-19 and the Financial System

Brookings Institution

“Webinar: COVID-19 and the financial system – How and why were financial markets disrupted?”

Wednesday, May 27, 2020

Overview

In a webinar led by David Wessel, Director of the Brookings Institution Hutchins Center on Fiscal and Monetary Policy, various distinguished panelists discussed and examined the impact of the COVID-19 induced shutdown of the economy on the financial markets. In summarizing the discussion, Wessel stated that unlike the global financial crisis of 2008-2009, the COVID-19 crisis did not originate in the financial system. He continued that in many ways, the COVID crisis has served as a “stress-test” measuring the efficacy of the reforms put in place by the government and private sector following that crisis. Yet, he concluded that the dislocations apparent in the financial markets as a result of the COVID-19 crisis were significant enough to warrant unprecedented intervention by the Federal Reserve, particularly in the market for U.S. Treasuries.

As such, the panelists below examined the question of whether the financial markets amplified the COVID-19 financial shock, and if so, what actions should be considered to reduce such amplification in the future. Specifically, Darrell Duffie examined the surprising issues that arose in the market for U.S. Treasuries, Itay Goldstein focused on the corporate bond market, Beth Hammack provided a market perspective and Nellie Liang, utilizing her experience as the founding director of the Division of Financial Stability at the Federal Reserve, supplied commentary on lessons learned over the past several months.

Panelists & Presentation Materials

• Darrell Duffie, Dean Witter Distinguished Professor of Finance, Stanford Graduate School of Business
  • Hutchins Center Working Paper #62: Still the World’s Safe Haven? Redesigning the U.S. Treasury Market After the COVID-19 Crisis
  • Presentation Slides
• Itay Goldstein, Joel S. Ehrenkranz Family Professor of Finance, Wharton School of Business, University of Pennsylvania
  • Presentation Slides: Investment Funds and the Corporate-Bond Market in the COVID-19 Crisis
• Beth Hammack, Global Treasurer, Goldman Sachs
• Nellie Liang, Miriam K. Carliner Senior Fellow, Economic Studies, The Hutchins Center on Fiscal and Monetary Policy, Brookings Institution
  • Presentation Slides: COVID-19 and the Financial System: How and Why Were Financial Markets Disrupted? 

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