Running head: MONEY SUPPLY 1
Wall Street Journal Analysis
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MONEY SUPPLY 2
Wall Street Journal Analysis
Kowsman, P. (2021). Banks in Germany Tell Customers to Take Deposits Elsewhere. Wall
Street Journal. Retrieved from https://www.wsj.com/articles/banks-in-germany-tell-
customers-to-take-deposits-elsewhere-11614594601?mod=hp_lead_pos5
MONEY SUPPLY
The main purpose of this article is to highlight the impact of COVID-19 on money
supply across the world. In Economics, the term ‘money supply’ refers to the aggregate value
of money available in an economy at one time. When looking at money supply, the two areas
for analysis include the amount of money in circulation and demand deposits. In the article,
the author examines demand deposits and the extent to which the pandemic affected them.
The COVID-19 pandemic has had adverse effects on economic activities throughout the
world. As economic activities slowed down due to the wide-range of containment measures
that were put in place by governments across the world, there is no doubt that the global
economy was going to shrink, and the money supply was going to be affected.
In the article, the author looks at the situation of the money supply in Germany where
banks are experiencing a deposits glut, and as a result, many banks started charging fees on
deposits. For example, two of the biggest banks in Germany, Deutsche Bank AG, and
Commerzbank AG, started charging their existing clients 0.5% annual rates for the deposits.
They are, however, instructing new clients to take their money to another part of Europe that
is not experiencing the glut. Additionally, banks are creating online tools that may help their
customers to take their monies abroad. The new situation has been created by the fact that as
the global economy shrinks, individuals and business organizations stop borrowing money,
and this leaves with no options but to decline the deposits. It is also necessary to note that
banks generally earn profits by lending money at interest, and when consumers stop
MONEY SUPPLY 3
borrowing, the banks will have nothing to do with the deposits. From the article, it is evident
that there are many factors beyond human control that affect the supply of money, and what
financial institutions can do is to come up with measures to prevent the factors from having
adverse effects on the economy.
