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Quantitative easing

📈 Economics By CampusDown Wiki Editorial Team Last updated
Quantitative easing (QE) is an unconventional monetary policy in which a central bank buys large amounts of assets such as government bonds to inject money when interest rates are near zero.
Contents
  1. 1. Overview
  2. 2. Frequently asked questions
  3. 3. References

Overview

When rates hit the lower bound (liquidity trap), central banks buy bonds and MBS, raising reserves and lowering long-term rates. The Bank of Japan began QE in March 2001; the Fed started in November 2008 and expanded in 2020; the ECB launched public-sector purchases in 2015. Risks include asset bubbles and exit shocks. Slowing purchases is tapering; shrinking holdings is QT.

Frequently asked questions

Is it money printing?
It creates reserves by buying assets, not direct transfers to government.

References

  1. Bank of Japan. (2001). New procedures for money market operations and monetary easing (19 March 2001).
  2. Board of Governors of the Federal Reserve System. (2008, November 25). Press release on purchases of agency debt and MBS.
  3. Bernanke, B. S. (2020). The new tools of monetary policy. American Economic Review, 110(4), 943–983.

Reports and materials that use this theory (Korean)

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Tapering (monetary policy)What tapering means, how it differs from rate hikes and quantitative tightening, the 2013 taper tantrum, the Fed’s 2021 taper, and market effects.📈 EconomicsLiquidity trapWhat a liquidity trap is, its basis in Keynes’ liquidity preference theory, why monetary policy loses traction near zero interest rates, Japan and post-2008 examples, and responses such as fiscal policy, QE and forward guidance.📈 EconomicsDeflationWhat deflation is, how it differs from disinflation, causes, why it is dangerous (delayed spending, Fisher’s debt deflation, zero lower bound), Japan’s experience and policy responses.📈 EconomicsGresham’s lawGresham’s law holds that when two monies with different intrinsic values must legally circulate at the same value, the better money is hoarded and the📈 Economics

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This article was last updated on October 24, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.