Quantitative Easing Monetary Policy
A Quantitative Easing Monetary Policy is a printing money policy (by a central bank) that is used to purchase financial assets from private financial institution (such as commercial banks).
- Context:
- It can (typically) increase a Monetary Base.
- It can (typically) lower the Finance Yield on those financial assets.
- It can lead to increased Corporate Profit.
- It can lead to Regressive Wealth Redistribution.
- Example(s):
- Counter-Example(s):
- See: Currency War.
References
2016
- (Rogoff, 2016) ⇒ Kenneth S. Rogoff. (2016). “The Curse of Cash." Princeton University Press. ISBN:1400883210
2013
- http://en.wikipedia.org/wiki/Quantitative_easing
- Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.[1][2][3] A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other private institutions, thus increasing the monetary base and lowering the yield on those financial assets.[4] This is distinguished from the more usual policy of buying or selling government bonds in order to keep market interest rates at a specified target value.[5][6] [7]
Expansionary monetary policy typically involves the central bank buying short-term government bonds in order to lower short-term market interest rates.[8][9][10][11] However, when short-term interest rates are at or close to zero, normal monetary policy can no longer lower interest rates.[12] Quantitative easing may then be used by monetary authorities to further stimulate the economy by purchasing assets of longer maturity than short-term government bonds, and thereby lowering longer-term interest rates further out on the yield curve.[13][14] Quantitative easing raises the prices of the financial assets bought, which lowers their yield.[15]
Quantitative easing can be used to help ensure that inflation does not fall below target.[7] Risks include the policy being more effective than intended in acting against deflation (leading to higher inflation in the longer term, due to increased money supply),[16] or not being effective enough if banks do not lend out the additional reserves.[17] According to the IMF and various other economists, quantitative easing undertaken since the global financial crisis of 2007–08 has mitigated some of the adverse effects of the crisis.[18][19][20]
- Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.[1][2][3] A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other private institutions, thus increasing the monetary base and lowering the yield on those financial assets.[4] This is distinguished from the more usual policy of buying or selling government bonds in order to keep market interest rates at a specified target value.[5][6] [7]
- ↑ King, Mervyn. "No guarantee bank lending will rise, says Mervyn King". http://www.bbc.co.uk/news/business-15446545.
- ↑ Template:Cite news
- ↑ Publications | Learning the Lessons from QE and Other Unconventional Monetary Policies: 17–18 November. Bank of England (18 November 2011).
- ↑ Bank of England (27 May 2013). "Quantitative easing – injecting money into the economy". bankofengland.co.uk. http://www.bankofengland.co.uk/education/Documents/targettwopointzero/t2p0_qe_supplement.pdf.
- ↑ Quantitative Easing Explained. London: Bank of England. 2011. http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf. "The MPC's decision to inject money directly into the economy does not involve printing more banknotes. Instead, the Bank buys assets from private sector institutions – that could be insurance companies, pension funds, banks or non-financial firms – and credits the seller's bank account."
- ↑ "Quantitative Easing". Bank of England. http://www.bankofengland.co.uk/publications/quarterlybulletin/qb090201.pdf. "The Bank can create new money electronically by increasing the balance on a reserve account. So when the Bank purchases an asset from a bank, for example, it simply credits that bank's reserve account with the additional funds. This generates an expansion in the supply of central bank money"
- ↑ 7.0 7.1 "Quantitative Easing Explained". Bank of England. http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm. "This does not involve printing more banknotes. Instead the Bank pays for these assets by creating money electronically and crediting the accounts of the companies it bought the assets from."
- ↑ Open market operations: A Glossary of Political Economy Terms – Dr. Paul M. Johnson. Auburn.edu.
- ↑ Open Market Operation – Fedpoints. Federal Reserve Bank of New York.
- ↑ Monetary policy Instruments. Swiss National Bank.
- ↑ The implementation of monetary policy in the euro area. European Central Bank. 2008. pp. 14–19.
- ↑ BBC (6 March 2013). "What is quantitative easing?". bbc.co.uk. http://www.bbc.co.uk/news/business-15198789.
- ↑ "Dr. Econ: I noticed that banks have dramatically increased their excess reserve holdings. Is this buildup of reserves related to monetary policy?". Federal Reserve Bank of San Francisco. March 2010. http://www.frbsf.org/education/activities/drecon/2010/0310.html. Retrieved 4 April 2011.
- ↑ Bernanke, Ben (13 January 2009). "The Crisis and the Policy Response". Federal Reserve. http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm. Retrieved 4 April 2011.
- ↑ Template:Cite news
- ↑ Template:Cite news
- ↑ Template:Cite news
- ↑ Unconventional Choices for Unconventional Times: Credit and Quantitative Easing in Advanced Economies; by Vladimir Klyuev, Phil de Imus, and Krishna Srinivasan; IMF Staff Position Note SPN/09/27; 4 November 2009.. (PDF).
- ↑ "Evaluating Large-Scale Asset Purchases," 11 October 2012
- ↑ Feldstein, Martin (24 February 2011). "Quantitative Easing and America's Economic Rebound". project-syndicate.org. Project Syndicate. http://www.project-syndicate.org/commentary/feldstein33/English. Retrieved 4 April 2011.