Klaas Knot: Entering and exiting the frozen-state economy

Opening remarks by Mr Klaas Knot, President of the Netherlands Bank, at "Virtual session with Klaas Knot: the economic impact of COVID-19", organised by Danske Bank, 21 April 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

In his opening remarks at a virtual session organised by Danske Bank, Klaas Knot said that the outbreak of the coronavirus first of all represents a global health crisis. At the same time, its consequences are manifesting themselves as an unprecedented shock to the world economy. Large parts of our economies have been frozen. Many challenges will unfold on the road to a new normal, which itself is still distant and undefined. It is also clear that central banks within their mandates stand ready to play their part in mitigating the adverse economic consequences of this global crisis.

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Introduction

Thanks to the organisers for asking me to share with you my take on the macroeconomic consequences of the global outbreak of the coronavirus.

It is clear that the outbreak and spread of the coronavirus first of all represent a global health crisis. At the same time, its consequences are also manifesting themselves as an unprecedented shock to the world economy.

Societies that thrive on interconnectedness have been put on lockdown, bringing large parts of the economy to a standstill.

How our economies will be affected over the longer term is still unclear. At the moment, we do not even know whether this will mainly turn out to be a demand or a supply shock, let alone that we can say something about the size of these shocks.