An Overview of Central Banks’ Answers to Economic Stimulus Following Covid-19

In this paper we discuss the implications of various economic stimulus mechanisms implemented by the United States and EU central banks to combat the economic downturn caused by the Covid-19 pandemic. The huge increase in both the Federal Reserve’s and European Central Bank’s balance sheets using financial tools has led to a distortion of stock markets and government bonds. In turn, this has led to a monumental increase in MZM (deprecated M3) that may prove to be unsustainable. As such, the central banks’ governance bodies have taken steps to provide alternatives to fiat money as a means of last resort