Quantitative Easing

Quantitative Easing (QE) is a monetary policy instrument used by Central Banks to stimulate the economy when standard monetary policy becomes ineffective. It involves the large-scale purchase of financial Assets, such as government Bonds, to inject Liquidity into the financial system, lower Interest Rates, and encourage lending and investment.

By increasing the Money Supply and lowering Interest Rates, QE aims to promote economic growth, increase consumer spending, and prevent deflation.

Examples:

• United States (2008-2014): The Federal Reserve implemented several rounds of QE after the 2008 financial crisis, purchasing trillions of dollars in Treasury and mortgage-backed Securities to support the economy.
• European Central Bank (2015-2022): The ECB initiated QE to coMBAt low inflation and stimulate growth in the Eurozone, buying a wide range of Assets including government Bonds and corporate debt.
• Bank of Japan (2001-present): The BoJ has utilized QE to fight deflation and stimulate economic growth, purchasing large amounts of government Bonds and equities.