When there's a problem on the rise, central banks usually come to the rescue. But as economies have evolved and become more complex - and after the 2008 recession, the traditional policies and methods have had to go undergo a huge test. As a result, central banks have switched to brand new strategies that include quantitative easing to do the job.
As the COVID-19 pandemic takes its toll on both humans and the economy, central banks have again made their contributions to help. To have a better understanding of how they have responded, read the infographic that comprises data from the IMF to bring to light, the policy responses of some crucial economies.
The responses by the central bank to he pandemic have had a huge impact but a few of them have led to increasing debt-levels and many critics are shocked.
The ECB in Europe is being monitored since 2015 for asset purchases. According to Germany's highest court, the program is unlawful and disadvantageous to German taxpayers. That being said, Germany invests heavily in the ECB than any of its other members so this ruling makes sense. And although this ruling is not related to the COVID-19 pandemic asset purchases, it does affect future use.
The U.S. Fed has also faced a $7 trillion expansion in its balance sheet for a similar program since the outbreak of the virus. This is expected to cause more dependency on the Fed to fund government programs and the huge difficulty linked with properly lowering these holdings.
Check out the Infographic below!
Infographic by: Visualcapitalist.com