Page 25 - ARUBA TODAY

BUSINESS Saturday 21 March 2020
A25

In this Feb. 5, 2018, file photo, the seal of the Board of Governors
of the U.S, Federal Reserve System lies embedded in the floor at
the Marriner S. Eccles Federal Reserve Board Building in Wash-
ington.
Associated Press This Wednesday, April 3, 2019, file photo shows a box filled with dollar bills, in New York.

Fed to help banks Associated Press

purchase muni bonds Filthy lucre: Paper money

to keep credit flowing shunned for fear of virus spread

By CHRISTOPHER RUGABER during the 2008 financial By KEN SWEET rus, but the risk from cash so constant use.
AP Economics Writer crisis, but its expansion to AP Business Writer far is small compared with Even the Federal Reserve
WASHINGTON (AP) — The include muni bonds is a NEW YORK (AP) — In a other transmission routes. A has taken efforts to make
Federal Reserve said it new step that wasn't taken world suffering a pandem- scientific paper published sure the money supply is not
would seek to hold down back then. ic, cash is no longer king. early in the outbreak found contaminated. Banknotes
spiking interest rates in States and cities are facing A growing number of busi- the virus can live on card- that circulated in Europe
the state and municipal a looming cash crunch as nesses and individuals board for up to 24 hours and Asia are being quar-
bond markets by support- revenue from sales taxes worldwide have stopped and up to three days on antined for seven to 10
ing banks' purchase of the and other taxes are likely using banknotes in fear that plastic and stainless steel. days as a "precautionary
bonds. to fall sharply in the coming physical currency, handled The researchers, however, measure," according to a
The Fed said Friday that it weeks and months. At the by tens of thousands of did not test whether it can Federal Reserve spokesper-
would loan money to banks same time, many public in- people over their useful life, live on banknote paper. son.
that banks would then use stitutions are facing higher could be a vector for the The presence of live virus While businesses are dis-
to purchase highly-rated costs, particularly hospitals spreading coronavirus. particles on banknotes couraging cash usage,
muni bonds from money and other health programs. Public officials and health does not mean they are there have been reports
market mutual funds or The Fed has in the past experts have said that the a health hazard, public of customers making large
from muni bond funds. The come under criticism from risk of transferring the virus health experts said. Virus withdrawals from ATMs in
goal is to stabilize the $3.8 Democrats in Congress for person-to-person through particles are unlikely to re- several parts of the coun-
trillion muni bond market not using its emergency the use of banknotes is turn to the air, or aerosolize, try. Some banks have had
and ensure states and cit- lending powers to assist small. But that has not once on a surface. to order additional cash
ies and other public enti- struggling local govern- stopped businesses from "It's not impossible that from the Fed or keep ATMs
ties, including hospitals, ments. House Speaker refusing to accept cur- there might be traces of vi- stocked at higher levels to
can borrow at low cost. Nancy Pelosi asked Fed- rency and some countries rus on dollar bills but if you allow larger customer with-
Without the ability to bor- eral Reserve Chair Jerome from urging their citizens to wash your hands it should drawals.
row, local and state gov- Powell on Tuesday to con- stop using banknotes alto- provide adequate protec- Banknote avoidance is
ernments could be forced sider doing so. The Fed says gether. tions, you shouldn't need not just happening in the
to lay off workers. its action Friday was in re- Open Books, a non-profit anything else," said Julie U.S. In South Korea, which
The Federal Reserve Bank sponse to turmoil in finan- bookstore in Chicago, sent Fischer, a professor at the has been more successful
of Boston is conducting the cial markets. an email to customers last Center for Global Health in stemming the outbreak,
transactions and is doing so Also Friday, the Fed said it week asking individuals not Science and Society at the country's central bank
by expanding the Money would expand its currency to use cash. Georgetown University, on took all banknotes out of
Market Mutual Fund Liquid- exchanges with five central A chain of diners in Wash- C-SPAN. circulation for two weeks
ity Facility, an emergen- banks, including by provid- ington State has also Other devices used to pay or, in some cases, burned
cy program it launched ing week-long exchanges, stopped accepting cash. for items are just as likely paper money.
Wednesday. The Fed has or currency swaps, every And delivery services like to be vectors for disease The National Bank of Po-
launched three emergen- day rather than once a Grubhub, Door Dash, and transfer. Credit and debit land said Thursday on Twit-
cy lending programs, all of week. others have instituted "no cards are made of plas- ter that "Polish banknotes
which are intended to pro- The Fed provides dollars to contact" deliveries, and tic and metal. ATMs are are subjected to a quaran-
vide a source of borrowing overseas central banks be- have either stopped offer- touched by hundreds of tine" and are therefore safe
to panicked financial mar- cause some business is con- ing cash as a payment op- human hands a day. And to use in cash transactions.
kets, as investors and busi- ducted overseas in dollars tion or are actively discour- there have been studies The bank did not respond
nesses increasingly stock- and foreign banks also pro- aging it. that show smartphones are to a request sent Friday for
pile cash and sell securities. vide dollar-denominated Experts say cash does carry heavily contaminated with more details about how
The MMLF was first used loans to their customers.q a risk of transmitting the vi- bacteria because of their that works. q