A major need for macroprudential policies in the aftermath of the crisis

There will be considerable money creation due to the monetisation of public debt during the coronavirus crisis. The key concern is therefore not excessive public debt (the government bonds are monetised), but excess money supply. This may result in: Asset price bubbles, especially in residential real estate, which are dangerous in themselves and increase wealth inequalities; Massive variability and size of international capital flows, especially from and to emerging countries, and therefore of exchange rates. If a public debt crisis is avoided, the same may not be true for a financial instability crisis, which is why active macroprudential policies will be needed to combat: Real estate bubbles, for example by using loan-to-value ratios and taxation of short-term capital gains on real estate; Speculative international capital flows, by introducing selective capital controls.