Indonesia and Philippine central banks cross the Rubicon

JAKARTA/HONG KONG — Economic infection from the new coronavirus has pushed some central banks in developing Asia to cross the Rubicon and buy bonds directly from governments.

Known as debt monetization, these bond purchases by Indonesia and the Philippines essentially provide free money for governments to spend, unless they are reversed at some point.

It’s a risky strategy as they could erode confidence in monetary authorities and weaken currencies, potentially triggering uncontrollable inflation. No major central bank in the developed world has made such a move in recent times.

“In the extreme, investors could lose faith in so many emerging

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