Annual Economic Report 2021

It is now over a year since the Covid-19 pandemic struck out of the blue, plunging the global economy into a historically deep recession. An acute health crisis turned into an overwhelming economic crisis, as policymakers adopted stringent containment measures to save lives. This was a recession in response to an insidious invisible enemy.

The global recession was deep, but ended sooner than expected, aided by considerable policy support. The recovery has been uneven; some countries and sectors returned to pre-pandemic growth paths, while others lagged. Meanwhile, financial conditions have remained exceptionally accommodative.

The long-term rise in economic inequality since the 1980s is largely due to structural factors, well outside the reach of monetary policy, and is best addressed by fiscal and structural policies.

Central bank digital currencies (CBDCs) offer in digital form the unique advantages of central bank money: settlement finality, liquidity and integrity. They are an advanced representation of money for the digital economy.