Due to the economic difficulties governments and central banks were experiencing

during the COVID-19 pandemic, broad money growth shot through the roof in
many nations The primary reason for this increase was the implementation of
expansionary monetary policies to mitigate the negative effects of the pandemic on
the economy. As a result, people and businesses received significant sums of
money, leading to an increase in their bank deposits and overall broad money
supply. In response to the COVID-19 crisis, the European Union has implemented
an expansionary fiscal and monetary strategy. A recovery fund under Next
Generation EU, which is focused on the green and digital transitions, is included in
the fiscal policy. Unconventional policy is part of the monetary framework.
measures, in particular the acquisition of assets through the Pandemic Emergency
Purchase Program, and specifically designed longer-term refinancing activities to
support bank lending to businesses and Nevertheless, that is consistent with
independent central banking for households. The sudden rise in broad money is a
reflection of the pressing need to add liquidity to the system in order to avoid a
liquidity crisis and guarantee the efficient operation of financial markets.
Furthermore, the substantial rise in broad money showed the severity of the
economic downturn and the requirement for significant policy changes.
Policymakers ought to have understood that the crisis might not be adequately
addressed by the conventional monetary policy tools, such as interest rate changes.
To stabilize the financial system and aid in economic recovery, unorthodox
measures like quantitative easing and direct lending programs were needed.