Many central banks such as the US Central Bank (Fed) and the European Central Bank are trying to combat the Coronavirus pandemic. The Fed has injected trillions of dollars into the market as part of this struggle and can continue to do so. However, the General Manager of the International Payments Bank (BIS) finds these steps taken by the central banks inadequate.
The Fed put the trillions of dollars in the market to ease the economic effects of the coronavirus pandemic, but this move of the Fed was not enough to save the economy.
According to BIS General Manager Agustin Carstens, this may be due to how money is used rather than insufficient money. According to the post shared by Carstens, in order for the economy to really relax, this money needs to be put in the pocket of the real needy:
“The liquidity injected by the central bank needs to penetrate every aspect of the economy. Therefore, this money needs to be transferred to individuals and businesses in need. Otherwise, no matter how much money the central bank injects the economy, there is not enough demand in the market. ”
According to Carstens’ statements, central banks will have to support especially small and medium-sized enterprises (SMEs) to combat this process. Carstens also states that this will not work if only one or two countries do it, and central banks should jointly fight this pandemic.