Quantitative Easing (QE)
Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when traditional monetary policy has become ineffective. It involves the central bank buying government bonds or other financial assets from the market in order to inject money into the economy and increase liquidity. This is done in order to encourage lending and investment, and to help boost economic growth.
History of Quantitative Easing
Quantitative easing was first used by the Bank of Japan in the early 2000s in response to the country’s economic stagnation. The policy was then adopted by the Federal Reserve in the United States in 2008 in response to the global financial crisis. Since then, other central banks around the world have also adopted quantitative easing as a tool to stimulate their economies.
Comparison of Quantitative Easing Policies
| Country | Amount of QE (in trillions) |
|---|---|
| United States | $4.5 |
| Japan | $3.2 |
| United Kingdom | $1.2 |
| European Union | $1.1 |
Summary
Quantitative easing is an unconventional monetary policy used by central banks to stimulate the economy when traditional monetary policy has become ineffective. It involves the central bank buying government bonds or other financial assets from the market in order to inject money into the economy and increase liquidity. For more information on quantitative easing, visit the websites of the Federal Reserve, Bank of Japan, Bank of England, and European Central Bank.
See Also
- Monetary Policy
- Interest Rates
- Fiscal Policy
- Central Bank
- Inflation
- Deflation
- GDP
- Bond Market
- Asset Purchases
- Currency Exchange
