The Covid-19 pandemic has impacted all the economies, big or small, across the globe. Central banks everywhere have been proactively dealing with the situation and have successfully pushed a large amount of liquidity to the banks through various means. However, due to widespread uncertainty caused by the pandemic, banks are reluctant to lend, and consumers are hesitant to avail credit. This article highlights the adverse impact that surplus liquidity may have on the banks and economies if adequate demand is not created.
