It’s time for free money It’s time for free money It’s time for free money

It’s time for free money

Christopher Dembik

Head of Macroeconomic Research

Summary:  As the coronavirus outbreak is hitting the economy, the concept of helicopter money is coming back into vogue again. The latest policy measures proposed by Western policymakers are not strictly speaking the implementation of helicopter money, but it looks a lot like it.

Over the past few days, policymakers have proposed bold economic measures to tackle consequences of the COVID-19:

  • France’s Emmanuel Macron declared the country “at war” against the virus and claimed he will do “whatever it costs” to save the economy. In his speech to the Nation yesterday, he made a bold promise saying “there will be no bankruptcy” and that the government will offer €300bn of state guarantee to SMEs.

  • A few days earlier, Germany pledged unlimited cash to businesses hit by the COVID-19 and deployed a financial bazooka of €550bn to defend businesses that includes both loans and credit guarantees provided by the state development agency KFW.

  • Inspired by the example of Hong Kong (cash handout of HK$10,000 to all permanent residents), US economists and politicians are discussing direct cash handouts. Yesterday, Sen. Mitt Rommey called for direct government payments of $1,000 to every American adult in order to “increase spending in the economy” (please see his proposal to counter the crisis at the bottom of the page). Harvard professors Jason Furman and Greg Mankiw, both former CEA chairs, respectively under President Barack Obama and under President George W. Bush, proposed the implementation of a similar framework.

  • Yesterday, Bill Dudley, ex Federal Reserve board member from New York, suggested to make transfers from the government to the people rather than to companies in order to deal with loss of income.

Even before the start of the crisis, IMF Olivier Blanchard and Macron’s former advisor Jean Pisani-Ferry advocated for the use of helicopter money as a “replacement for the still missing coming fiscal capacity” in the euro area (Nov. 2019).

Strictly speaking, all these measures are not helicopter money, but it looks a lot like it. The basic idea behind this concept is that central banks should give money to the people (that’s why it is also called “QE for people”), in order to increase their purchasing power, rather than helping banks like in the previous crisis. It is quite easy to understand why this concept has a clear political appeal, notably in period of turmoil. In a little bit more than a decade, we have moved from “bank bailout” in 2007-08 to “bailout SMEs and everything else” at any cost in 2020.

The above examples refer more to fiscal support, but it is directly inspired by helicopter money in the sense that governments are literally giving money away to the people, specifically in the case of cash handouts, in order to avoid the system fall down. The underlying idea is to flood the economy with an unlimited amount of cash to prevent the crisis from worsening. These transfers are causing an increase of public debt and are ultimately financed by government bonds that will likely be purchased by central banks. This is the good moment to remember that more than 70% of Germany’s sovereign debt and more than 60% of France’s sovereign debt are held by central banks at the global level.

As the economic impact of the COVID-19 outbreak is likely to be more visible in coming weeks, the concept of helicopter money will certainly generate more and more support among policymakers. Central banks have done their maximum over the past two weeks to make sure liquidity is flowing into the market and that interest rates remain at low levels. The problem is that low interest rates do not automatically induce a significant revival of private investment and consumption. Central banks can push rates as low as possible, if there is not enough demand and that SMEs are strangled by cash flow problems and lack of confidence in the future, the economic machine will not restart. Cash handouts could bring a short-term economic relief and help building businesses’ cash reserves and stimulating demand on the condition that cash is not saved (as it might unfortunately be the case in many European countries). But this massive flow of money into the system, both resulting from fiscal and monetary stimulus, is not without consequences and could spur inflationary pressures in the long run if not controlled.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.