Roll up, roll up and write down

How can governments recover faster from insolvency?

Proposals from the G20 and the IMF may ease the pain for both borrowers and lenders

“The procedures for resolving an international debt crisis”, wrote Alexis Rieffel, a former American Treasury official, in 1985, “resemble a three-ring circus”. In the first ring, the bankrupt country negotiates with the imf, which must decide how much the country can repay and what belt-tightening it must endure. 

In the second ring, the country asks for leniency from other governments to whom it owes money. And in the third, it seeks a “comparable” deal from private lenders.

The circus sometimes, however, struggles to hold it all together. After Argentina defaulted in May, for example, the imf failed to play its customary role in the first ring. 

It could not provide new supervision and finance, because the country was still reeling from the failure of its previous imf bail-out. The second ring has also suffered from some absent performers. In the past decade China has become a far bigger lender to poor countries than other governments combined (see chart 1). 

But it is not a member of the Paris Club, which has tended to oversee debt renegotiations between countries and their official creditors. As for the third ring, when the Latin American debt crisis struck in the early 1980s, it took commercial lenders (and their governments) almost seven years to find a lasting solution. The juggling went on and on.

Many fear another series of defaults is looming. Government revenues and export receipts have plunged in many poor countries (though efforts by America’s Federal Reserve to calm financial panic have lowered their cost of borrowing). 

On November 13th Zambia became the sixth country this year to default on its bonds. 

Eight spend over 30% of their fiscal revenues on interest payments, reckons Fitch, a rating agency, more than in the early 2000s when Bono and other debt-relief campaigners were at their clamorous best. 

Fitch gives 38 sovereigns a rating of b+ or worse, where b denotes a “material” risk of default (see chart 2). According to its projections, governments with a junk rating—bb+ or worse—may soon outnumber those classed as investment-grade.

Will the circus handle any new crisis better than it did in the 1980s? 

In some ways its task is even harder now.

Poor countries owe a wider variety of liabilities to a broader range of creditors. 

For many emerging economies, bonds have eclipsed bank loans. And loans themselves are far from uniform. Some are secured against state assets, such as a stake in a public enterprise, or oil revenues; the creditor might prefer to seize the collateral rather than write off the debt. 

Others are syndicated, or parcelled out among many banks, which means that no single creditor can forgive the loan at its own discretion.

This gnarly mix of instruments is matched by an equally tangled bunch of creditors: public, private and everything in between. In April, for example, the G20 group of big economies called on member governments to provide a repayment holiday on loans to the world’s poorest countries. 

China was unhappy that private creditors did not share in the effort. Others complained that China Development Bank, which is owned and directed by the state but not synonymous with China’s government, did not take part.

There has, however, also been progress. On November 21st-22nd, G20 leaders will sign off on a “common framework” for renegotiating debts with the world’s poorest countries. The framework, in effect, extends the principles of the Paris Club to those G20 members who are not already in it, widening the second ring of the circus. 

It applies only to countries with unsustainable debts, and any borrower that receives relief from the G20 must seek a similar deal from other creditors. Because all lenders must do their bit, little hangs on whether they are classified as official or private. That is perhaps why the framework has met little opposition from China.

There has been progress in contracts as well as clubs. After Argentina defaulted in 2001, it offered to exchange its unpayable bonds for new securities with easier terms. Some bondholders rejected the deal, seeking full payment in New York’s courts instead. 

That made life harder for both Argentina and its other creditors. Since 2003, most bonds issued under New York law have contained “collective-action clauses”, which compel all bondholders to go along with any deal accepted by the majority. 

Such clauses helped Ecuador resolve its default this year with “hardly any real grumbling”, notes Clay Lowery of the Institute of International Finance, a bankers’ association. 

They also helped Argentina reach a deal with its main bondholders in August (albeit with “a fair amount of grumbling”).

A review of the “architecture” for resolving sovereign debt, published by the imf in September, pondered other contractual innovations that might ease future restructurings. Lenders might insist on wider use of “negative-pledge clauses” that prevent a borrower pawning vital assets as collateral to other creditors. 

Syndicated loans might add “yank the bank” provisions that allow a lender to be kicked out of the syndicate if it blocks a deal. The fund is also paying renewed attention to “contingent” debt instruments that are more sensitive to the ups and downs that befall poor countries. 

Barbados, for example, has issued bonds that repay less in the event of an earthquake or tropical cyclone.

One idea, proposed by Ben Heller and Pijus Virketis of hbk Capital Management, an investment fund, is “bendy bonds”. In most cases, these would behave like ordinary bonds. But in a crisis the issuer could extend the maturity and defer interest for a couple of years in return for paying additional interest at the end of the bond’s life. 

The issuer could benefit from the kind of payment holiday envisaged in the G20’s April initiative without any help from the great powers. As the long history of debt restructurings attests, “fixed” income liabilities are often anything but. 

Solemn commitments to pay in full and on time cannot always be kept. 

Lenders and borrowers alike might therefore welcome instruments that specify up front when and how fixed income will become more flexible.

Lessons from Japan: coping with low rates and inflation after the pandemic 

Fearing prolonged stagnation, governments are looking to Tokyo’s experience during the past three decades   

Robin Harding in Tokyo and Chris Giles in London

© FT montage

Japan’s bankers celebrated the end of the 1980s with raucous parties and an all-time high of 38,957 on the Nikkei stock index. It had been a magnificent decade and they all looked forward to another one.

The economy had grown by an average of 4 per cent a year and seemed well set to continue on a similar path. By 1995, forecast Nomura Securities, the Nikkei index would hit 63,700. It was a thrilling, golden era. Foreign officials, financiers and journalists rushed to Tokyo. 

Everyone wanted to learn the lessons of Japan.

They still do. Thirty years on, Japan’s economy has not lost its fascination. But rather than the secrets to miraculous economic growth, today’s students of Japan want to know how to respond when the good times stop.

“What had been regarded as Japanese problems are now faced more or less by Europeans,” says Hiroshi Nakaso, the former deputy governor of the Bank of Japan. 

“I’m not saying I’m convinced Europe will follow Japan’s path but Japan’s experience certainly offers hints.”

       A Tokyo money dealer trading at the Tokyo Foreign Exchange market in 1987 © AP

Economically, those lessons include the vital importance of maintaining public confidence in central bank policy, and the need for a strategy to generate economic growth. 

More broadly, Japan’s decades of experience offer a template for how a society can live with low interest rates. Large parts of the developed world are likely to emerge from the coronavirus crisis with economies in that same position.

That prospect is unsettling to some because of the stagnation that Japan has seen over the past three decades. Since 1990, Japan has recorded average real growth of 0.8 per cent and inflation of 0.4 per cent. The Nikkei index never again came close to that December 1989 peak. Today it stands at 25,907. In dollars, per capita incomes in Japan are a third lower than in the US.

While the rest of the world enjoyed booming growth in the 1990s and 2000s, Japan’s problems seemed unique, and foreign economists lined up to propose radical solutions. 

But then their own economies began to show an eerie similarity. In the wake of the 2008-09 financial crisis, interest rates fell to zero in Europe and the US, and during the recovery inflation did not bounce back.

No longer an odd economic twilight zone, Japan is now the best case study of what happens in an environment of persistent low inflation and interest rates — a situation much of the developed world may face in the aftermath of the Covid-19 pandemic.

To extract any lessons, however, it is important to understand what actually happened in Japan over the past 30 years. Although the outcomes of low growth, low inflation and low interest rates look similar throughout the period, the economic forces at work changed a lot. There was no single process of “Japanification”.

Instead, there were three distinct but mutually reinforcing chapters: financial crisis in the 1990s; persistent, mild deflation in the 2000s; and then, in the 2010s, an attempt to fight back against Japan’s ageing demographics. With three chapters in Japan’s post bubble era, the lessons for the rest of the world are inevitably nuanced.


The 1990s — a banking crisis

A man in Sapporo city reads a newspaper report on Japan’s Hokkaido Takushoku Bank transferring its operations to a provincial bank of the North Pacific (Hokuyo) Bank © Jiji Press/AFP via Getty

In the early years of the 1990s it slowly dawned on people that the heady peak in stock and land markets had been a bubble — one backed by trillions of yen in bank loans, which speculators and property developers had no way to pay back. Rather than foreclose on bad loans, however, corporate Japan and its bankers pretended the assets were still solid and the debts were still good.

Minoru Masubuchi took over the Bank of Japan’s financial system department in 1994. “I think we knew quite early that it was an extremely severe problem — that was the understanding I had when I took the post,” he says. “However, for the world at large — especially in politics and the media — there wasn’t such a realisation.”

The technocrats wanted to recapitalise the banks with public money, but they could not persuade the politicians. The banking crisis ground on until the “Dark November” of 1997. “[Hokkaido] Takushoku Bank and Yamaichi Securities went under and there was an atmosphere of confusion,” says Mr Masubuchi. “The worst time was that period from November until the end of 1997.”

Initial attempts to fix the banks made matters worse. At the start of 1997, the finance ministry said it would step in if capital ratios fell below a certain level, but that prompted banks to slash their lending in an effort to survive. “Many small and medium-sized firms failed,” says Hiroshi Yoshikawa, a member of the government’s economic council from 2001-06. “1997-98 was truly one of the worst years for postwar Japanese society.”

A widespread credit crunch hammered the economy. Scarred by the bubble, the BoJ was slow to cut interest rates, and repeated rounds of fiscal stimulus had little effect. Inflation declined steadily and by 1999 it was below zero. But the underlying cause was not peculiar to Japan or even historically unusual — it was an unresolved banking crisis.

Watching from the other side of the Pacific, US policymakers learnt this lesson thoroughly. When the global financial crisis struck in 2008-09, they were quick to slash interest rates and force public capital on banks through the Troubled asset relief programme. “The bad loan problem and financial trouble was ended by 2003,” says Mr Yoshikawa. “If we had any trouble after 2003 we must have a different explanation.”

After a great struggle, Japan had resolved the banking crisis and everyone thought things would now go back to normal. “Personally, I thought we’d go back to a regular business cycle. I didn’t expect this stagnation scenario to continue for a long time,” says Mr Masubuchi.


The 2000s — stagnation

After a great struggle, Japan had resolved the banking crisis and everyone thought things would now go back to normal © Toru Hanai/Reuters

The weakness of the economy was obvious and the Bank of Japan needed to do something. The question was what. All the textbooks assumed positive interest rates. “There were no papers we could consult. I guess what we had was very basic financial theory,” says Nobuo Inaba, who was the BoJ’s section chief for monetary policy in the mid-1990s and went on to become one of its executive directors.

The resulting period of experimentation wrote the manual for central banks around the world. First, the BoJ cut interest rates to zero. (At the time it did not think negative rates were possible, says Mr Masubuchi.)

Meanwhile, a former businessman on the BoJ’s policy board called Nobuyuki Nakahara began to promote the ideas of Bennett McCallum, an American economist. Mr McCallum proposed a rule for how a central bank should increase the money supply when the economy fell short of full employment. The BoJ could not cut interest rates any further, but it could increase the quantity of bank reserves. Mr Nakahara called this “quantitative easing”.

Quantitative easing brought down long-term interest rates and had a calming effect on financial markets, but it did not transform inflation or growth, which recovered slowly through the 2000s. The central problem, it slowly became clear, was that the public no longer expected prices or wages to go up, and no matter what the central bank did, their expectations were self-fulfilling.

“In terms of monetary policy, our experience tells us that anchoring inflation expectations is important. In Japan, under the prolonged period of deflation, inflation expectations came to be anchored around zero,” says Mr Nakaso.

One of the primary lessons of Japan’s experience is the need for aggressive action to pre-empt any fall in inflation expectations — and the limited power of monetary policy if that is not achieved.

But the lesson about expectations has hit home in central banks across developed economies. Jay Powell, US Federal Reserve chairman, has pledged to raise inflation to moderately exceed its 2 per cent target “for some time”, expressing “determination” to succeed in ensuring inflation expectations do not fall to zero in the wake of the pandemic.

The European Central Bank and Bank of England have both this autumn revised their guidance to commit to keeping monetary policy as loose or looser than it is now until inflation rises back to target and shows no signs of falling again.

The 2010s — fighting demographics

As the period of low inflation dragged on, however, and other advanced countries adopted zero interest rates after 2008, economists began to consider deeper causes. 

Towards the end of the decade, the then BoJ governor began to argue that the root cause of Japan’s low inflation was weak economic growth, and that was linked to the country’s demographics.

“Nowadays everybody says the Japanese economy has poor future prospects because of population decline. But that kind of view is actually quite new,” says Mr Yoshikawa. 

During the 2000s, when companies were cutting jobs, he says, the debate was about Japan’s surplus of workers, not a shortage.

Japan’s fertility rate has been low since the 1970s and the working age population peaked in the 1990s. With ageing workers wanting to save, and little motivation for businesses to invest in a declining economy, the logical result is a low natural interest rate. The US economist Lawrence Summers crystallised this line of thinking in 2014 when he revived the concept of “secular stagnation”.

If demographics are the root of Japan’s problems, then there is a mixed message for the rest of the world. Fertility rates are higher in Europe and the US and they both have meaningful immigration. Although their populations are ageing, that suggests they have a better chance of escaping persistent zero inflation and interest rates. But other east Asian economies such as China, South Korea and Taiwan are closely following Japan’s demographic track.

Many economists think the theory of demographic destiny is oversold, however, and either does not explain the trend towards zero inflation and interest rates or is framed incorrectly. 

Mr Yoshikawa is not a fan of the demographic thesis. “A declining population is of course a negative factor for growth. But at least historically, the importance of innovation dominates it by far,” he says.

For Charles Goodhart, former BoE chief economist, an ageing population holds the promise of escape from the Japanese trap, since the elderly spend more than they earn in the labour market, diminishing the excess savings that brought the world zero interest rates and problematic low inflation.

If this theory is correct, however, it is yet to manifest itself in Japan. Rather than wait for an improvement, the 2010s in Japan brought the most determined effort yet to shake the nation out of its stagnation: the stimulus known as Abenomics.

The performance of the economy under former Shinzo Abe’s premiership improved significantly and public debt stabilised for the first time in years, but the fundamentals of interest rates and inflation were ultimately little changed. Inflation remained low and interest rates were still pinned to the floor, providing little scope to act as a cushion when downturns such as the Covid-19 crisis hit. 

Adjusting expectations

Former BoJ deputy governor Hiroshi Nakaso: ‘I’m not saying I’m convinced Europe will follow Japan’s path but Japan’s experience certainly offers hints’ © Reuters

Thirty years on from the bursting of the bubble, a common reaction to Japan’s predicament is to ask whether there is really a problem at all. The country is stable and prosperous. 

Per capita growth in output has not been too bad. For many, especially the elderly, low inflation is a good thing, and a large public debt is less daunting when it carries an interest rate of zero.

Such optimism, however, belies difficult problems of economic management. For much of the past three decades, Japan’s economy has operated below full capacity, ruining the life chances of millions of people who graduated into a weak labour market. The country’s only option when a crisis such as Covid-19 strikes is to run up ever more public debt.

What are the lessons from Japan’s experience? One is that the route to zero interest rates and zero inflation does not matter. The crucial requirement is to find a way to stop a temporary plunge to zero interest rates from becoming a self-fulfilling prophecy. 

So far, the US and UK have avoided falling into the trap of zero inflation expectations, but the ECB is perilously close. 

The demographics of Europe and the US are different to Japan, but all advanced countries have ageing populations — which may bring caution in spending — while technological progress is a global and not a national phenomenon.

Most important is the need to look past the specifics of Japan’s experience and recognise that whatever the difficulties, countries must not give up on the quest for growth, and do whatever is necessary to raise it to levels that keep employment high, wages rising and inflation from sinking to zero.

“There were two things that we recognised over time. One is how important financial stability is and the second is the importance of a growth strategy,” says Mr Nakaso. 

“Policies to address both the demand and the supply side of the economy are important. Raising Japan’s potential growth rate remains essential.”

The pressing urgency of more US fiscal relief

Speed is more important than perfection as Congress dithers

The editorial board

Food Bank For New York City distribute turkeys to 4,000 families in need. The Fed has warned that people’s savings are running down and a new round of assistance is needed © Michael Loccisano/Getty

In retrospect, the achievement was underrated. A fractious Washington came together in March to agree the largest programme of fiscal relief in US history. 

Cash payments and business credit were among the measures that eased the economic shock of the coronavirus pandemic. In near-unprecedented circumstances, America’s governing class outperformed its low reputation.

Eight months on, the question is whether it can repeat the feat. The US needs another round of government assistance. Jay Powell, chair of the Federal Reserve, has warned that people’s savings are running down. 

The boost to unemployment benefit, passed in March, is due to end on December 31. A spate of evictions and foreclosures could mar a winter already darkened by a surge in virus cases.

It is in this context that Joe Biden prepares for the White House, and Janet Yellen for the Treasury. The president-elect could not name a more seasoned figure for that role than this former Fed chair. 

The first woman atop the Treasury would be at once a historic and conventional choice. After the amateur chaos of the Trump administration, experience is the theme of Mr Biden’s emerging cabinet.

Ms Yellen will need all of hers. If some of the crisis of the spring has returned, Washington’s constructive spirit has not. Republicans, who run the Senate for now, balk at Democratic plans for $2tn of relief. 

There are squabbles over detail, too, with Republicans averse to bailouts for state and local governments. Some of this is the cynicism of a lame-duck Congress. But even when Mr Biden takes office in January, there is no certainty of a deal. His party will have a narrow majority in the Senate, if they have one at all.

What the Democrats do have is the more persuasive argument: as Mr Powell said last month, too much intervention is better than too little. But if Republicans do not budge (President Trump, needing them as he contests his election loss, can hardly press them to) then a smaller relief bill might be preferable to none. 

The emphasis must for now be on urgency, not perfection. Mr Biden and Ms Yellen can impart that message to Congressional Democrats. They retain the option of later adding to whatever is agreed, especially if the party clinches the Senate.

In the meantime, they can signal to households and businesses that other kinds of help are on the way. Last summer, in an enlightened moment, Mr Trump used an executive order to extend unemployment aid, raiding other funds to do so. The incoming administration can commit to similar actions, if Congress does not act.

A president Biden could extend the curbs on landlords who wish to evict tenants, for example, which also run out soon. He could also improve the pay and conditions of federal workers. 

None of this would have the sweep and scale of a proper, legislated relief bill. And executive orders are invariably contentious. But with formal power still two months away, Mr Biden’s options are constrained. 

He can do something for economic sentiment now by pledging bold measures in the near future.

Agreeing to a scaled-down bill would be a political hazard for Democrats. If it leads to a slower than necessary recovery, the Republicans would disavow blame, and run against a weak economy in the 2022 midterms. 

Something similar befell the Democrats in the past decade, as Mr Biden, then vice-president, will recall with a shudder. But he and his Treasury secretary-in-waiting will have time enough to reflect on the electoral implications. 

A fragile economy won’t wait. 

Death by Algorithm?

Big data, artificial intelligence, and digital technologies have left us surprisingly ill-equipped for the challenges now facing us, such as climate change and the COVID-19 pandemic. Building resilience and flexibility – the hallmarks of sustainable systems – into policymaking and international cooperation is a more promising approach.

Dirk Helbing, Peter Seele

ZÜRICH/LUGANO – Our geological epoch, the Anthropocene, in which mankind is shaping the fate of the planet, is characterized by existential threats. 

Some are addressed in action plans such as the UN’s Sustainable Development Goals. 

But we seem to be caught between knowing that we should change our behavior and our entrenched habits.

In an overpopulated world, many have asked, “What is the value of human life?” The COVID-19 pandemic has raised this issue once more, framing the question in stark terms: Who should die first if there are not enough resources to save everyone?

Many science-fiction novels, such as Frank Schätzing’s The Tyranny of the Butterfly, deal with similar concerns, often “solving” the sustainable-development problem in cruel ways that echo some of the darkest chapters in human history. And reality is not far behind. 

It is tempting to think we can rely on artificial intelligence to help us navigate such dilemmas. The subjects of depopulation and computer-based euthanasia have been under discussion, and AI is already being used to help triage COVID-19 patients.

But should we let algorithms make life-and-death decisions? Consider the famous trolley problem. In this thought experiment, if one does nothing, several people will be crushed by a runaway trolley car. If one switches the trolley onto another track, fewer people will die, but one’s intervention will kill them.

It has been suggested that the problem is about saving lives, but in fact it asks: “If not everyone can survive, who has to die?” Still, lesser evils are still evils. Once we start finding them acceptable, shocking questions are bound to follow, which can undermine the very foundations of our society and human dignity. 

For example, if an autonomous vehicle cannot brake quickly enough, should it kill a grandmother or an unemployed person?

Similar questions were asked as part of the so-called Moral Machine experiment, which collected data on ethical preferences in situations involving autonomous vehicles from participants worldwide, with the researchers discussing “how these preferences can contribute to developing global, socially acceptable principles for machine ethics.” 

But such experiments are not a suitable basis for policymaking.

People would prefer an algorithm that is fair. 

Potentially, this would mean making random decisions. Of course, we do not want to suggest that people should be killed randomly – or at all. This would contradict the fundamental principle of human dignity, even if the death were painless. 

Rather, our thought experiment suggests that we should not accept the framework of the trolley problem as given. If it produces unacceptable solutions, we should undertake greater collective efforts to change the setting. 

When it comes to autonomous vehicles, for example, we could drive more slowly or equip cars with better brakes and other safety technology.

Likewise, society’s current sustainability issues were not predetermined, but were caused by our way of doing business, our economic infrastructure, our concept of international mobility, and conventional supply-chain management. 

The real question should be why – nearly 50 years after the publication of the eye-opening Limits to Growth study – we still don’t have a circular, sharing economy. And why were we unprepared for a pandemic, an event which had been widely predicted?

Big data, artificial intelligence, and digital technologies have left us surprisingly ill-equipped for the challenges now facing us, be it climate change, the COVID-19 pandemic, fake news, hate speech, or even cyber security. The explanation is simple: 

While it sounds good to “optimize” the world using data, the optimization is based on a one-dimensional goal function that maps the complexity of the world to a single index. 

This is neither appropriate nor effective, and largely neglects the potential of immaterial network effects. It also underestimates human problem-solving abilities and the world’s carrying capacity.

Nature, by contrast, does not optimize; it co-evolves. It performs much better than human society in terms of sustainability and circular supply networks. 

Both our economy and our society could benefit from bio-inspired solutions that resemble ecosystems, particularly symbiotic ones. 

This means reorganizing our troubled world and building resilience and flexibility into policymaking and international cooperation. 

These hallmarks of sustainable systems are crucial for adapting to and recovering from shocks, disasters, and crises, such as those we face today.

Resilience can be increased in several ways, including redundancies, a diversity of solutions, decentralized organization, participatory approaches, solidarity, and, where appropriate, digital assistance. Such solutions should be locally sustainable for extended periods of time. 

In other words, rather than “learning to die in the Anthropocene,” as suggested by author Roy Scranton, we should “learn to live” in our current troubled times. 

This is the best insurance against developments that could force us into the moral quagmire of triaging human lives.

Dirk Helbing is Professor of Computational Social Science at ETH Zürich.

Peter Seele is Professor of Business Ethics at USI Lugano.

Vaccine playbook: what to expect and when

When will life return to normal, when will immunity kick in?

By Marla Paul

Covid vaccineExperts expect the vaccine to become widely available to anyone by mid-2021.

As the Centers for Disease Control and Prevention (CDC) begins to schedule the vaccine rollout, there are so many questions.

What can the public expect from a vaccination? 

Will we still have to be cautious about social contact and wear masks? 

How long before immunity kicks in? 

When will life return to normal?

Northwestern Medicine infectious disease and critical care experts offer a vaccine playbook below.

How long does it take for the COVID vaccines take effect? 

“All but one of the COVID vaccines in phase 3 clinical trials require two injections a few weeks apart. Then it will take a few weeks to obtain the full protective effect. 

Vaccines generate an immune response that mimics someone getting infected with the virus itself. 

It takes weeks for a full protective response during which the body makes antibodies and long-lasting memory T cells that can rapidly respond if the vaccinated person encounters the virus to protect them.” – Dr. Benjamin Singer

After vaccines become widely available, will we still have to be cautious? Wear masks? Social distance?

“I anticipate that masking and social distancing will be required for some time. 

Vaccines will take time to become widely available and take effect. Moreover, we may not see widespread vaccination of the population without concerted public health efforts on a national level. Note that adult vaccination rates for seasonal influenza rarely reach 50%.” – Singer

“We will need some level of protection until everyone is able to be vaccinated and the case prevalence reaches levels able to be controlled with contact tracing.  Other factors, including how many people get vaccinated and how the virus is spreading in communities, will also affect our behaviors.” – Dr. Michelle Prickett

“When everyone who wants a vaccine has received a vaccine, and the proportion of people either vaccinated or who had covid-19 reaches a "herd immunity" threshold, we won't need masks or social distancing any longer.  Until we get to that point, we will have to follow the guidance of our public health officials and continue to wear masks and practice social distancing.” – Dr. Robert Murphy

How much will vaccine compliance affect our safety and return to normal life?

“The vaccine appears to be very effective in preventing COVID-19. In addition, the few trial subjects who received the vaccine but still contracted COVID-19 had only mild illness.” – Singer

Will we need to get a new COVID-19 vaccine every year like the flu vaccine? If so, why?

“Recommendations for repeat vaccination will depend on the observed duration of protection as participants from vaccine clinical trials are followed over time.” – Singer

“We are not expecting to have a different vaccine annually with SARS-CoV-2.  If the virus were to mutate and become resistant to one or more of the vaccines, then we would have to change to a different vaccine with a different target.” – Murphy

When might a normal life as we knew it — pre-COVID — resume?

“If vaccines are widely available by the spring, and there is a distribution plan, I would imagine we could expect the restrictions to ease and return to normal by mid to late summer.” – Prickett

“In the latter half of 2021, things will be very different and much better than now, however a pre-covid state is more likely in 2022.” – Murphy

When will the “average” person, not high risk, be able to take the vaccine?

“As production ramps up and distribution networks are developed, the vaccines will become available to anyone who wants to take them. That should occur sometime mid-year 2021. Still, it will take many months to vaccinate those that want it as logistically, it will be challenging.” – Murphy

Does a person who has been infected with COVID-19 still need to get the vaccine?

“Patients who have been infected with COVID-19 should still get the vaccine.  We are not certain that a prior infection will lead to lifelong immunity. Current data suggests a prior infection could confer immunity for around six months.” – Prickett

The experts

Dr. Michelle Prickett is an associate professor of medicine at Northwestern University Feinberg School of Medicine and a Northwestern Medicine pulmonary and critical care specialist. 

Dr. Robert Murphy is executive director of the Institute for Global Health at Feinberg and Northwestern Medicine infectious disease expert.

Dr. Benjamin Singer is assistant professor of medicine at Feinberg and a Northwestern Medicine pulmonary and critical care specialist.