On 3 March 2020, G7 finance ministers and central bank governors vowed to use “all appropriate policy tools” to contain the economic threat posed by the COVID-19 coronavirus. The question left unanswered is what is appropriate, and what will work.

The immediate response took the form of central bank rate cuts, with the US Federal Reserve (Fed) fast off the mark. Though central banks can move quickly, however, it is not clear how much they can do given that interest rates are already at rock-bottom levels. In any case, the Fed’s failure to coordinate its rate cut with other major central banks sent a ne...