FXStreet reports that in the event of a second lockdown, analysts at Natixis believe equity markets would collapse, the number of bankruptcies would soar, governments would have no other choice than to increase fiscal deficits even further and central banks would have no choice but to fully monetise these even larger fiscal deficits. 

“On the eve of the first lockdown (March 2020), companies’ financial situation was healthy (high profits, reasonable debt). In a second lockdown, companies’ financial situation would be poor (lower profits and a sharp increase in debt due to the first lockdown).”

“The quantity of money supplied by central banks would become immense (far higher than what is forecast at present). This would give rise to a new risk of flight from money and a rejection of public currencies. The considerable excess money supply (in dollars, euros, etc.) would lead economic agents to refuse to hold public currencies.”