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This paper examines emerging market and developing economy (EMDE) central bank interventions to maintain financial stability during the COVID-19 pandemic. Through empirical analysis and case study reviews, it identifies lessons for designing future programs to address challenges faced in EMDEs, including less-developed financial markets and lower levels of institutional credibility. The focus is on the functioning of the financial markets that are key to maintaining financial stability—money, securities, and FX funding markets. Several lessons emerge, including: (i) objectives should be well-specified and communicated to facilitate eventual exit; (ii) intervention triggers should prioritize liquidity metrics over prices; (iii) actions should be sufficiently large to address market dysfunction; (iv) the risks of fiscal dominance and moral hazard should be minimized; and (v) program design should incentivize self-liquidation by appropriate pricing or through short-term operations that quickly liquidate. While interventions may increase risks to central bank balance sheets, potentially challenging policy solvency and operational independence, a well-designed framework can significantly mitigate these risks.

Asset and liability management --- Banking --- Banks and Banking --- Capital market --- Central bank operations --- Central Banks and Their Policies --- Central banks --- Currency crises --- Economic & financial crises & disasters --- Economics of specific sectors --- Economics --- Economics: General --- Finance --- Finance: General --- Financial markets --- Financial sector policy and analysis --- Financial sector stability --- Financial services industry --- General Financial Markets: General (includes Measurement and Data) --- General Financial Markets: Government Policy and Regulation --- Informal sector --- International Financial Markets --- Investment Decisions --- Liquidity --- Macroeconomics --- Money market --- Money markets --- Portfolio Choice --- Securities markets

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This paper considers the central bank mandate with respect to financial stability and identifies the links to the functioning of securities markets. It argues that while emergency support to securities markets is an important part of the crisis management response, a high bar should be set for its use. Importantly, it should be used only as part of a comprehensive policy package. The paper considers what types of securities markets may be important for financial stability, what market conditions could trigger emergency support measures, and how programs can be designed to restore market functioning while minimizing moral hazard.

Securities. --- Blue sky laws --- Capitalization (Finance) --- Investment securities --- Portfolio --- Scrip --- Securities --- Securities law --- Underwriting --- Investments --- Investment banking --- Law and legislation --- E-books --- Banks and Banking --- Finance: General --- Investments: General --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Institutions and Services: Government Policy and Regulation --- General Financial Markets: General (includes Measurement and Data) --- Portfolio Choice --- Investment Decisions --- General Financial Markets: Government Policy and Regulation --- Finance --- Investment & securities --- Banking --- Securities markets --- Liquidity --- Asset liquidity --- Financial markets --- Financial institutions --- Asset and liability management --- Financial sector stability --- Financial sector policy and analysis --- Capital market --- Economics --- Financial instruments --- Banks and banking --- Financial services industry --- United Kingdom