Given that the non-bank private sector is likely to have been the source for much of this funding, this is likely to have squeezed broad money growth. But the counterpart to this fall in private sector deposits is a strengthening in banks balance sheets which should in turn aid the recovery by improving the availability of bank lending. So the monetary impulse still operates. One approach to help mitigate the counterfactual problem is to use event studies which consider the impact of QE announcements on asset prices over relatively short windows. 7 Gilt yields may respond to such policy announcements both because of the impact gilt purchases have on the yields at which investors are willing to hold the reduced supply of gilts – the portfolio balance effect – and because of the information the announcement may be perceived to contain about the future stance of monetary policy – one element of the expectations channel. It is possible to get some indication of the size of the portfolio effect by considering movements in the spread of gilt yields to Overnight Indexed Swap (OIS) rates, which should not be affected by changes in the relative supply of gilts. Although precise estimates vary according to the maturity of the gilts and the size of the window, summing movements in giltOIS spreads following our announcements suggests that the portfolio balance effect may have reduced gilt yields by around 100 basis points. Again, a pretty sizeable effect. 6  This excludes the money holdings of intermediate OFCs.
The impact would continue to grow as the crisis persists, since the cash flow crunch would force companies – including those previously in a good liquidity position - to shut down for failure to secure financing; either due to increasing financing costs or the banks’ reluctance to finance amid fears of growing default risk during the crisis. This could lead to companies’ bankruptcies, which, due to the chain effect between economic sectors could thus result in a contraction in non-oil GDP. The Committee’s Mandate To counter the impact and repercussions of the crisis on the national economy, the Higher Steering Committee for Economic Stimulus (The Committee), formed by the Council of Ministers Resolution (455) on 31 March 2020, and chaired by the Governor of the Central Bank of Kuwait, adopted a proactive approach to realize economic stability throughout the crisis. It laid down and initiated economic stimulus measures to prepare for the economic recovery stage that shall  Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -3-  follow once we overcome this crisis. Immediately afterwards, a national economic and structural reform plan needs to be launched and adopted by all the relevant stakeholders. The Committee listed several measures and governing principles to serve as a framework for all its activities, and they are as follows:  -  -  -  -  Introducing immediate remedies that provide practical and swift solutions to protect the national economy supporting economic reform and best possible resource allocation.