Indonesia and Philippine central banks cross the Rubicon

Monetary authorities break taboo by buying bonds from primary market

Julius Caesar crossed the Rubicon river into Italy on his return from Gaul, precipitating the Roman Civil War. Central banks in Southeast Asia are also seen to be crossing the metaphorical point of no return. (Nikkei Montage/Source photo by Getty Images)

SHOTARO TANI and NARAYANAN SOMASUNDARAM, Nikkei staff writers

May 20, 2020 13:20 JST

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.