{{Short description|Monetary policy tool}} {{Use dmy dates|date=April 2020}} {{Public finance}} '''Quantitative easing''' ('''QE''') is a monetary policy action where a central bank purchases predetermined amounts of government bonds, company shares, or other financial assets (liquidity) in order to artificially stimulate economic activity.<ref>{{Cite web|url=https://www.bankofengland.co.uk/monetary-policy/quantitative-easing|title=Quantitative Easing|publisher=Bank of England}}</ref><ref>{{Cite journal |last=Koukouridis |first=Athanasios |date=April 9, 2025 |title=Bank Profitability in Times of Quantitative Easing: The Role of Central Bank Transparency |journal=Economies |volume=13 |issue=6 |page=161 |doi=10.3390/economies13060161 |doi-access=free}}</ref> Quantitative easing is a novel form of monetary policy that began in Japan and came into wide application in the US following the 2008 financial crisis.<ref name=":1">{{Cite book|last=Oatley|first=Thomas|url=https://books.google.com/books?id=4GJoDwAAQBAJ|title=International Political Economy: Sixth Edition|date=2019|publisher=Routledge|isbn=978-1-351-03464-7|pages=369–370}}</ref> It attempts to mitigate economic recessions when inflation is very low or negative.<ref>{{Cite journal |last=Eggertsson |first=Gauti B. |date=2011 |title=What Fiscal Policy Is Effective at Zero Interest Rates? |url=https://www.jstor.org/stable/10.1086/657529 |journal=NBER Macroeconomics Annual |volume=25 |issue=1 |pages=59–112 |doi=10.1086/657529 |jstor=10.1086/657529 |issn=0889-3365}}</ref> Quantitative tightening does the opposite, where for monetary policy reasons, a central bank sells off some portion of its holdings of government bonds or other financial assets.
Similar to conventional open-market operations used to implement monetary policy, a central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply. However, in contrast to conventional monetary policy, quantitative easing usually involves the purchase of riskier or longer-term assets (rather than short-term government bonds) of predetermined amounts at a large scale, over a pre-determined period of time.<ref name="McTeer">{{cite news|last=McTeer|first=Bob|date=23 December 2010|title=There's nothing wrong with the Fed printing money|work=Forbes|url=https://blogs.forbes.com/beltway/2010/12/23/theres-nothing-wrong-with-the-fed-printing-money/}}</ref><ref name="blogs.forbes.com">{{cite news|last=McTeer|first=Bob|date=26 August 2010|title=Quantitative easing is a toxic phrase for a routine policy|work=Forbes|url=https://blogs.forbes.com/beltway/2010/08/26/quantitative-easing-is-a-toxic-phrase-for-a-routine-policy/}}</ref>
Central banks usually resort to quantitative easing when interest rates approach zero, such as in 2008 and 2020 for the US and in 1999 for Japan.<ref>{{Cite web |last=Conte |first=Niccolo |date=2025-09-17 |title=Charted: U.S. Interest Rates Over Time (1954-2025) |url=https://www.visualcapitalist.com/charted-us-interest-rates-over-time/ |access-date=2025-12-17 |website=Visual Capitalist |language=en-US}}</ref><ref>{{Cite web |date=2025-11-28 |title=The Impact of Japan's Zero Interest Rate Policy |url=https://legalclarity.org/the-impact-of-japans-zero-interest-rate-policy/ |access-date=2025-12-17 |website=LegalClarity |language=en-US}}{{better source needed|date=February 2026|reason=apparent link spam}}</ref> Very low interest rates induce a liquidity trap, a situation where people prefer to hold cash or very liquid assets, given the low returns on other financial assets. This makes it difficult for interest rates to go below zero; monetary authorities may then use quantitative easing to stimulate the economy rather than trying to lower the interest rate. Quantitative easing can help bring the economy out of a recession<ref>Joseph E. Gagnon, [https://www.piie.com/publications/policy-briefs/quantitative-easing-underappreciated-success Quantitative Easing: An Underappreciated Success], Peterson Institute for International Economics, Policy Brief 16-4 (April 2016).</ref> and help ensure that inflation does not fall below the central bank's inflation target.<ref>Ricardo Reis, "[http://personal.lse.ac.uk/reisr/papers/16-jh_qe.pdf Funding Quantitative Easing to Target Inflation]", in "Designing Resilient Monetary Policy Frameworks for the Future”, Proceedings of the Jackson Hole Economic Policy Symposium: Federal Reserve Bank of Kansas City, August 2016, pp. 423–478.</ref>
The term quantitative easing was coined by economist Richard Werner in 1995.<ref>{{Cite news |date=2013-10-21 |title=How the phrase quantitative easing was invented |url=https://www.bbc.com/news/av/business-24614503 |work=BBC}}</ref> Since then, it has faced a range of criticisms. Economists argue that it can inflate asset bubbles, potentially worsening a recession rather than alleviating it.<ref>{{Cite web |last=Brilhante |first=Gerson |date=March 31, 2025 |title=The Limits And Contradictions Of Quantitative Easing In Monetary Cycles |ssrn=5193316 |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5193316}}</ref> Others highlight QE's mixed side effects and risks: it may overshoot its goal by countering deflation too aggressively and fueling long-term inflation, or fail to stimulate growth if banks remain reluctant to lend and borrowers hesitant to borrow. QE has also been criticized for raising financial asset prices, and thereby contributing to economic inequality.<ref>{{Cite web|url=https://www.bankingobserver.com/articles/a-numbers-game-how-quantitative-easing-lifts-stock-prices|title=A numbers game: How quantitative easing lifts stock prices|publisher=Banking Observer|access-date=22 September 2022|archive-date=22 September 2022|archive-url=https://web.archive.org/web/20220922164508/https://www.bankingobserver.com/articles/a-numbers-game-how-quantitative-easing-lifts-stock-prices|url-status=dead}}</ref> Major central banks around the world, including the US, UK, EU, and Japan, have implemented quantitative easing following the 2008 global financial crisis and again in response to the COVID-19 pandemic.<ref>{{Cite news|url=https://www.theglobeandmail.com/report-on-business/economy/an-uneasy-relationship-behind-response-to-financial-crash/article18293472/|title = An uneasy relationship behind response to financial crash |newspaper=The Globe and Mail |date = 27 April 2014 |last=McKenna |first=Barrie}}</ref>
== Process and benefits == {{See also|Monetary policy}} Standard central bank monetary policies are usually enacted by buying or selling government bonds on the open market to reach a desired target for the interbank interest rate. However, if a recession or depression continues even when a central bank has lowered interest rates targets to nearly zero, the central bank can no longer lower interest rates — a situation known as the liquidity trap.<ref>{{Cite journal |last1=Grandmont |first1=Jean-Michel |last2=Laroque |first2=Guy |date=1976 |title=The Liquidity Trap |url=https://www.jstor.org/stable/1911386 |journal=Econometrica |volume=44 |issue=1 |pages=129–135 |doi=10.2307/1911386 |jstor=1911386 |issn=0012-9682}}</ref> The central bank may then attempt to stimulate the economy by implementing quantitative easing, that is, by buying financial assets without reference to interest rates. This policy is sometimes described as a last resort to stimulate the economy.<ref>{{cite news |title=Quantitative easing: A therapy of last resort |url=https://www.nytimes.com/2009/01/11/business/worldbusiness/11iht-views12.1.19248009.html |work=The New York Times |access-date=12 July 2010 |date=1 January 2009}}</ref><ref>{{cite news |title=Quantitative easing: last resort to get credit moving again |url=https://www.theguardian.com/business/2009/jan/29/question-and-answer-quantitative-easing |work=The Guardian |access-date=12 July 2010 |date=29 January 2009 |first=Heather |last=Stewart}}</ref>
A central bank enacts quantitative easing by purchasing, regardless of interest rates, a predetermined ''quantity'' of bonds or other financial assets on financial markets from private financial institutions.<ref name="Bullard">{{cite web|url=https://www.stlouisfed.org/publications/regional-economist/january-2010/quantitative-easinguncharted-waters--for-monetary-policy|title=Quantitative Easing — Uncharted Waters for Monetary Policy|last=Bullard|first=James|date=January 2010|publisher=Federal Reserve Bank of St. Louis|access-date=26 July 2011}}</ref><ref name="bbcnews">{{cite news|url=http://news.bbc.co.uk/1/hi/business/7924506.stm|title=Q&A: Quantitative easing|date=9 March 2009|work=BBC|access-date=29 March 2009}}</ref> This action increases the excess reserves that banks hold. The goal of this policy is to ease financial conditions, increase market liquidity, and encourage private bank lending.<ref name="EconJour-Joyce">{{Cite journal |last1=Joyce |first1=Michael |last2=Miles |first2=David |last3=Scott |first3=Andrew |last4=Vayanos |first4=Dimitri |date=2012 |title=Quantitative Easing and Unconventional Monetary Policy — an Introduction |url=https://www.jstor.org/stable/23324224 |journal=The Economic Journal |volume=122 |issue=564 |pages=F271–F288 |doi=10.1111/j.1468-0297.2012.02551.x |jstor=23324224 |issn=0013-0133}}</ref>
Quantitative easing affects the economy through several channels:<ref>{{Cite journal|last=Lerven|first=Frank van|date=2016|title=Quantitative Easing in the Eurozone: a One-Year Assessment|url=https://www.intereconomics.eu/|journal=Intereconomics|volume=2016|issue=4|pages=237–242|doi=10.1007/s10272-016-0608-9|hdl=10419/191169|s2cid=189843544 |hdl-access=free}}</ref> ; Credit channel: By providing liquidity in the banking sector, QE makes it easier and cheaper for banks to extend loans to companies and households, thus stimulating credit growth. Additionally, if the central bank also purchases financial instruments that are riskier than government bonds (such as corporate bonds), it can also increase the price and lower the interest yield of these riskier assets.<ref>{{Cite book |last=Coppola |first=Frances |url=https://books.google.com/books?id=qsOlDwAAQBAJ&dq=Quantitative+easing+corporate+bonds+increase+the+price+and+lower+the+interest+yield&pg=PA15-IA1 |title=The Case For People's Quantitative Easing |date=2019-07-26 |publisher=John Wiley & Sons |isbn=978-1-5095-3132-5 |language=en}}</ref> ; Portfolio rebalancing: By enacting QE, the central bank withdraws an important part of the safe assets from the market onto its own balance sheet, which may result in private investors turning to other financial securities. Because of the relative lack of government bonds, investors are forced to "rebalance their portfolios" into other assets. Additionally, if the central bank also purchases financial instruments that are riskier than government bonds, it can also lower the interest yield of those assets (as those assets are more scarce in the market, and thus their prices go up correspondingly).<ref>{{Cite web|url=https://www.econstor.eu/bitstream/10419/180673/1/1027069444.pdf|title=Quantitative easing, portfolio rebalancing and credit growth: micro evidence from Germany}}</ref> ; Exchange rate: Because it increases the money supply and lowers the yield of financial assets, QE tends to depreciate a country's exchange rates relative to other currencies, through the interest rate mechanism.<ref>Luca Dedola, Georgios Georgiadis, Johannes Gräb, Arnaud Mehl (21 October 2020) [https://voxeu.org/article/quantitative-easing-policies-and-exchange-rates "Quantitative easing policies and exchange rates"]. ''voxeu.org.'' Retrieved 18 December 2020.</ref> Lower interest rates lead to a capital outflow from a country, thereby reducing foreign demand for a country's money, leading to a weaker currency. This increases demand for exports, and directly benefits exporters and export industries in the country.<ref>{{Cite book |url=https://books.google.com/books?id=NeLD4I-uBd4C&dq=Quantitative+easing+increase+exports&pg=PA64 |title=International Impacts of the Federal Reserve's Quantitative Easing Program: Hearing Before the Subcommittee on Monetary Policy and Trade of the Committee on Financial Services, U.S. House of Representatives, One Hundred Thirteenth Congress, Second Session, January 9, 2014 |date=2014 |publisher=U.S. Government Printing Office |language=en}}</ref> ; Fiscal effect: By lowering yields on sovereign bonds, QE makes it cheaper for governments to borrow on financial markets, which may empower the government to provide fiscal stimulus to the economy. Quantitative easing can be viewed as a debt refinancing operation of the "consolidated government" (the government including the central bank), whereby the consolidated government, via the central bank, retires government debt securities and refinances them into central bank reserves.<ref>{{Cite book |last=Rangeley |first=Max |url=https://books.google.com/books?id=VxkhEQAAQBAJ&dq=Quantitative+easing+cheaper+to+borrow&pg=PA15 |title=The Age of Debt Bubbles: An Analysis of Debt Crises, Asset Bubbles and Monetary Policy |date=2024 |publisher=Springer Nature |isbn=978-3-031-66473-1 |language=en}}</ref> ; Boosting asset prices: When a central bank buys government bonds from a pension fund, the pension fund, rather than hold on to this money, might invest it in financial assets, such as shares, that give it a higher return. And when demand for financial assets is high, the value of these assets increases. This makes businesses and households holding shares wealthier – making them more likely to spend more, boosting economic activity.<ref>{{cite journal |last1=Cortes |first1=Gustavo S. |last2=Gao |first2=George P. |last3=Silva |first3=Felipe B. G. |last4=Song |first4=Zhaogang |date=2022 |title=Unconventional monetary policy and disaster risk: Evidence from the subprime and COVID–19 crises |journal=Journal of International Money and Finance |volume=122 |article-number=102543 |doi=10.1016/j.jimonfin.2021.102543 |pmid=34949899 |pmc=8677330}}</ref> ; Signalling effect: Some economists argue that QE's main impact is due to its effect on the psychology of the markets, by signaling that the central bank will take extraordinary measures to facilitate economic recovery. For instance, it has been observed that most of the effect of QE in the Eurozone on bond yields happened between the date of the announcement of QE and the actual start of the purchases by the ECB.{{citation needed|date=June 2019}}
== History ==
The Bank of Japan introduced QE from March 19, 2001, until March 2006, after having introduced negative interest rates in 1999. Most western central banks adopted similar policies in the aftermath of the 2008 financial crisis.<ref>[https://www.msn.com/en-gb/news/world/bank-of-england-chief-attacks-peers-for-calling-quantitative-easing-an-addiction/ar-AAMZ79b Bank of England chief attacks peers for calling quantitative easing an 'addiction']. ''The Telegraph''. 5 August 2021. Retrieved 17 August 2021.</ref>
=== Precedents === The methods behind QE had been implemented long before its creation. The US Federal Reserve belatedly implemented policies similar to the recent quantitative easing during the Great Depression of the 1930s.<ref>Hoover Institution, Economics Working Paper 14110, "Exiting from Low Interest Rates to Normality: An Historical Perspective", November 2014 [http://www.hoover.org/sites/default/files/14110_-_bordo_-_exiting_from_low_interest_rates_to_normality_-_an_historical_perspective.pdf Retrieved 10 March 2015.]</ref><ref>{{Cite web|url=https://www.aei.org/articles/the-30-year-fixed-mortgage-should-disappear/|title=The 30-year fixed mortgage should disappear |first=Edward J. |last=Pinto |work=American Enterprise Institute - AEI |publisher=American Enterprise Institute |date=27 April 2016}}</ref> Specifically, banks' excess reserves exceeded 6 percent in 1940, whereas they vanished during the entire postwar period until 2008.<ref>Stefan Homburg (2017). [https://ideas.repec.org/b/oxp/obooks/9780198807537.html A Study in Monetary Macroeconomics]. Oxford University Press. {{ISBN|978-0-19-880753-7}}.</ref> Despite this fact, many commentators called the scope of the Federal Reserve quantitative easing program after the 2008 crisis "unprecedented".<ref>Telegraph, Federal Reserve ends QE, 29 October 2014 [https://www.telegraph.co.uk/finance/economics/11196629/Federal-Reserve-ends-QE.html Retrieved 10 March 2015]</ref><ref>{{Cite magazine |url=https://money.cnn.com/2010/08/11/news/economy/economic_collapse_GDP_unemployment.fortune/index.htm |archive-url=https://web.archive.org/web/20100812054417/http://money.cnn.com//2010//08//11//news//economy//economic_collapse_GDP_unemployment.fortune//index.htm |url-status=dead |archive-date=12 August 2010 |title=Is QE2 finally the economic collapse? |date=August 11, 2010 |magazine=Fortune}}</ref><ref>The Heritage Foundation, "Is the Inflation Threat Real? Is it Imminent?" {{unfit|1=[https://web.archive.org/web/20150402203738/http://www.heritage.org/research/reports/2010/02/is-the-inflation-threat-real-is-it-imminent Retrieved 10 March 2015]}}</ref><ref>{{Cite report |url=https://www.jstor.org/stable/resrep29864 |title=What Is the U.S. Federal Reserve? |last1=McBride |first1=James |last2=Chatzky |first2=Andrew |last3=Sergie |first3=Mohammed Aly |date=2020 |publisher=Council on Foreign Relations}}</ref>
=== Japan (2001–2006) === A policy termed "quantitative easing" (量的緩和, ''ryōteki kanwa'', from 量的 "quantitative" + 緩和 "easing")<ref>{{cite web|url=https://kotobank.jp/word/%E9%87%8F%E7%9A%84%E7%B7%A9%E5%92%8C-178938|title=量的緩和|website=kotobank.jp}}</ref> was first used by the Bank of Japan (BoJ) to fight domestic deflation in the early 2000s.<ref>{{cite news|url=http://news.bbc.co.uk/2/hi/8517760.stm|title=Japan sets inflation goal in fight against deflation|date=16 February 2010|work=BBC News|access-date=4 April 2011}}</ref><ref>{{cite web |author=Mark Spiegel |title=FRBSF: Economic Letter—Quantitative Easing by the Bank of Japan (11/02/2001) |url=http://www.frbsf.org/publications/economics/letter/2001/el2001-31.html |publisher=Federal Reserve Bank of San Francisco |access-date=19 January 2009 |archive-date=14 May 2013 |archive-url=https://web.archive.org/web/20130514085420/http://www.frbsf.org/publications/economics/letter/2001/el2001-31.html |url-status=dead}}</ref> The BOJ had maintained short-term interest rates at close to zero since 1999. The Bank of Japan had for many years, and as late as February 2001, stated that "quantitative easing ... is not effective" and rejected its use for monetary policy.<ref>Hiroshi Fujiki et al., "[http://www.imes.boj.or.jp/english/publication/mes/2001/me19-1-4.pdf Monetary Policy under Zero Interest Rate: Viewpoints of Central Bank Economists] {{Webarchive|url=https://web.archive.org/web/20190121214341/http://www.imes.boj.or.jp/english/publication/mes/2001/me19-1-4.pdf |date=21 January 2019}}", ''Monetary and Economic Studies'', February 2001, p. 98. Retrieved 9 August 2010.</ref>
The Bank of Japan adopted quantitative easing on 19 March 2001.<ref name="IMES2002">Shirakawa, Masaaki, "[http://www.imes.boj.or.jp/english/publication/edps/2002/02-E-03.pdf One Year Under 'Quantitative Easing'] {{Webarchive|url=https://web.archive.org/web/20190121214326/http://www.imes.boj.or.jp/english/publication/edps/2002/02-E-03.pdf |date=21 January 2019}}", Institute for Monetary and Economic Studies, Bank of Japan, 2002.</ref><ref name="boj.or.jp">Bank of Japan, "[http://www.boj.or.jp/en/type/release/zuiji/kako02/k010319a.htm New Procedures for Money Market Operations and Monetary Easing] {{Webarchive|url=https://web.archive.org/web/20090719220308/http://www.boj.or.jp/en/type/release/zuiji/kako02/k010319a.htm |date=19 July 2009}}", 19 March 2001. Retrieved 9 August 2010.</ref> Under quantitative easing, the BOJ flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves and therefore little risk of a liquidity shortage.<ref>"[http://www.frbsf.org/publications/economics/letter/2004/el2004-33.html Easing Out of the Bank of Japan's Monetary Easing Policy] {{Webarchive|url=https://web.archive.org/web/20071218211204/http://frbsf.org/publications/economics/letter/2004/el2004-33.html |date=18 December 2007}}" (2004–33, 19 November 2004). Federal Reserve Bank of San Francisco.</ref> The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero. It later also bought asset-backed securities and equities and extended the terms of its commercial paper-purchasing operation.<ref>{{Cite web|url=http://europe.pimco.com/LeftNav/Viewpoints/2006/Masanao-+Quantitative+Easing.htm|archive-url=https://web.archive.org/web/20100726104941/http://europe.pimco.com/LeftNav/Viewpoints/2006/Masanao-+Quantitative+Easing.htm|url-status=dead|title=PIMCO/Tomoya Masanao interview|archive-date=26 July 2010}}</ref> The BOJ increased commercial bank current account balances from ¥5 trillion to ¥35 trillion (approximately US$300 billion) over a four-year period starting in March 2001. The BOJ also tripled the quantity of long-term Japan government bonds it could purchase on a monthly basis.{{citation needed|date=November 2013}} However, the seven-fold increase notwithstanding, current account balances (essentially central bank reserves) being just one (usually relatively small) component of the liability side of a central bank's balance sheet (the main one being banknotes), the resulting peak increase in the BOJ's balance sheet was modest, compared to later actions by other central banks.{{citation needed|date=October 2019}} The Bank of Japan phased out the QE policy in March 2006.<ref>{{cite journal|author=Hiroshi Ugai|title=Effects of the Quantitative Easing Policy: A Survey of Empirical Analyses |journal=Bank of Japan Working Paper|date=July 2006|url=https://www.boj.or.jp/en/research/wps_rev/wps_2006/wp06e10.htm}}</ref>
=== After 2007 === Following the 2008 financial crisis, policies similar to those undertaken by Japan were used by the United States, the United Kingdom, and the Eurozone. Quantitative easing was used by these countries because their risk-free short-term nominal interest rates (termed the federal funds rate in the US, or the official bank rate in the UK) were either at or close to zero. According to Thomas Oatley, "QE has been the central pillar of post-crisis economic policy."<ref name=":1" />
During the peak of the 2008 financial crisis, the US Federal Reserve expanded its balance sheet dramatically by adding new assets and new liabilities without "sterilizing" these by corresponding subtractions. In the same period, the United Kingdom also used quantitative easing as an additional arm of its monetary policy to alleviate its financial crisis.<ref>Alloway, Tracy, [http://ftalphaville.ft.com/blog/2008/11/10/18038/the-unthinkable-has-happened/ The Unthinkable Has Happened], ft.com, 10 November 2008. Retrieved 9 August 2010.</ref><ref>[https://www.bloomberg.com/apps/news?pid=20601087&sid=aziecc.MkO28 'Bernanke-san' Signals Policy Shift, Evoking Japan Comparison], Bloomberg.com, 2 December 2008</ref><ref>[https://www.ft.com/content/2240b7ce-09ce-11de-add8-0000779fd2ac Bank pumps £75bn into economy], ft.com, 5 March 2009</ref>
==== United States {{anchor|QE2|QE3}}==== thumb|350px|Federal Reserve holdings of treasury notes (blue) and mortgage-backed securities (red) [[File:FFR treasuries.webp|thumb|260px|right| {{legend-line|#F5A623 solid 3px|30-year mortgage average}} {{legend-line|#F8E71C solid 3px|30-year Treasury bond}} {{legend-line|#000000 solid 3px| 10-year Treasury bond}} {{legend-line|#9013FE solid 3px| 2-year Treasury bond}} {{legend-line|#4A90E2 solid 3px| 3-month Treasury bond}} {{legend-line|#D0021B solid 4px| effective federal funds rate}} {{legend-line|#E786F9 solid 4px| CPI inflation year/year}} {{color box|lightgrey}} Recessions ]] [[File:M2, CPI, PCE.webp|thumb|260px|right|(Percent change from a year earlier){{legend-line|#4572a7 solid 4px|M2 money supply}} {{legend-line|#89A54E solid 4px|CPI}} {{legend-line|#80699B solid 4px|Core CPI}} ]] One of the Federal Reserve System monetary policy tools is QE along with forward guidance when controlling short-term interest rates, the central bank's primary monetary policy tool, fails to achieve the desired effect.<ref name="EconJour-Joyce" />
Although the Fed lacks statutory supervision and requires no outside approval to enact monetary policies, a 1977 amendment to the Federal Reserve Act gives the central bank a mandate to provide for moderate, long-term interest rates, maximize employment, and stabilize prices, the latter two often referred to as the Fed's dual mandate.<ref>{{Citation |title=Introduction to U.S. Economy: Monetary Policy |vauthors=((Labonte, M.)) |year=2026 |url=https://www.congress.gov/crs-product/IF11751 |access-date=28 March 2026 |publisher=United States Congress}}</ref><ref>{{United States Code|12|225a}}, {{USStat|91|1387}}, {{USPL|95|188}}, {{USBill|95|hres|9710}}</ref><ref>{{Cite journal |last=Dinovelli |first=Benjamin |date=May 2025 |title=The Federal Reserve's Forgotten Credit Mandate |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5253206 |journal=Harvard Law Review |volume=138 |issue=7 |pages=1887–1910 |doi=10.2139/ssrn.5253206 |ssrn=5253206 |issn=1556-5068}}</ref> The two primary mechanisms of monetary policy by which the Fed can effectuate those economic conditions is to raise or lower interest rates or to increase or decrease the money supply.<ref>{{Cite journal |last=Thorbecke |first=Willem |date=2002 |title=A Dual Mandate for the Federal Reserve: The Pursuit of Price Stability and Full Employment |url=https://www.jstor.org/stable/40326100 |journal=Eastern Economic Journal |volume=28 |issue=2 |pages=255–268 |jstor=40326100 |issn=0094-5056}}</ref> Within the Fed, the Federal Open Market Committee is responsible for deciding the Fed's monetary policy. The FOMC is composed of 12 members, including the president of the Federal Reserve Bank of New York, 4 presidents from a rotating selection of the 12 Federal Reserve Banks around the country, and 7 members of the system's Board of Governors.<ref>{{Cite journal |last=Tempelman |first=Jerry H. |date=2009 |title=The Financial Crisis and the Implementation of Monetary Policy |url=https://www.jstor.org/stable/23491071 |journal=Business Economics |volume=44 |issue=4 |pages=216–219 |doi=10.1057/be.2009.23 |jstor=23491071 |issn=0007-666X}}</ref>
The Fed held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession.<ref>{{Cite journal |last=Cecchetti |first=Stephen G |date=2009-01-01 |title=Crisis and Responses: The Federal Reserve in the Early Stages of the Financial Crisis |url=https://doi.org/10.1257/jep.23.1.51 |journal=Journal of Economic Perspectives |volume=23 |issue=1 |pages=51–75 |doi=10.1257/jep.23.1.51 |doi-access=free|issn=0895-3309}}</ref><ref>{{Cite journal |last1=Kottimukkalur |first1=Badrinath |last2=Nallareddy |first2=Suresh |last3=Venkatachalam |first3=Mohan |date=December 2025 |title=The changing macroeconomic information content of aggregate earnings |url=https://link.springer.com/10.1007/s11142-025-09920-5 |journal=Review of Accounting Studies |language=en |volume=30 |issue=4 |pages=3387–3420 |doi=10.1007/s11142-025-09920-5 |issn=1380-6653}}</ref> The US has used QE four times so far in its history, with varying degrees of intensity.
'''November 2008: QE1.''' In late November 2008, the Federal Reserve started buying $600 billion in mortgage-backed securities.<ref>{{Cite web |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20081125b.htm|title=Federal Reserve announces it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises and mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae|work=Board of Governors of the Federal Reserve System}}</ref> By March 2009, it held $1.75 trillion of bank debt, mortgage-backed securities, and Treasury notes; this amount reached a peak of $2.1 trillion in June 2010. Further purchases were halted as the economy started to improve, but resumed in August 2010 when the Fed decided the economy was not growing robustly. After the halt in June, holdings started falling naturally as debt matured and were projected to fall to $1.7 trillion by 2012. The Fed's revised goal became to keep holdings at $2.054 trillion. To maintain that level, the Fed bought $30 billion in two- to ten-year Treasury notes every month.<ref>{{cite journal |url=https://www.academia.edu/6943181 |title=Quantitative Monetary Easing: The history and impacts on financial markets |last1=Ali |first1=Abdulmalik |journal=Academia |access-date=14 February 2015}}</ref><ref>{{Cite journal |last=Kuttner |first=Kenneth N. |date=November 2018 |title=Outside the Box: Unconventional Monetary Policy in the Great Recession and Beyond |url=https://www.aeaweb.org/articles?id=10.1257/jep.32.4.121 |journal=Journal of Economic Perspectives |language=en |volume=32 |issue=4 |pages=121–146 |doi=10.1257/jep.32.4.121 |doi-access=free|issn=0895-3309}}</ref>
'''November 2010: QE2.''' In November 2010, the Fed announced a second round of quantitative easing, buying $600 billion of Treasury securities by the end of the second quarter of 2011.<ref>{{cite news |url=https://money.cnn.com/2010/11/03/news/economy/fed_decision/index.htm |archive-url=https://web.archive.org/web/20101104002354/http://money.cnn.com/2010/11/03/news/economy/fed_decision/index.htm |url-status=dead |archive-date=4 November 2010 |title=QE2: Fed pulls the trigger |first=Annalyn |last=Censky |publisher=CNNmoney.com |date=3 November 2010 |access-date=10 August 2011}}</ref><ref>"[http://useconomy.about.com/od/glossary/g/Quantitative-Easing.htm What is the Federal Reserve Quantitative Easing] {{Webarchive|url=https://web.archive.org/web/20150211173038/http://useconomy.about.com/od/glossary/g/Quantitative-Easing.htm |date=11 February 2015}}". useconomy.about.com (22 September 2011).</ref> The expression "QE2" became a ubiquitous nickname in 2010, used to refer to this second round of quantitative easing by US central banks.<ref>{{Cite news |last= Authers |first= John |author-link=John Authers |date=5 November 2010 |url=https://www.ft.com/content/d3dd363a-e918-11df-a1b4-00144feab49a|title=Fed's desperate measure is a watershed moment |newspaper=Financial Times}}</ref> Retrospectively, the round of quantitative easing preceding QE2 was called "QE1".<ref>{{cite news|last=Conerly|first=Bill|title=QE3 and the Economy: It Will Help, But Not Solve All Problems|url=https://www.forbes.com/sites/billconerly/2012/09/13/qe3-and-the-economy-it-will-help-but-not-solve-all-problems/|access-date=13 September 2012|newspaper=Forbes|date=13 September 2012}}</ref><ref>{{cite news |url=https://www.theguardian.com/business/2011/jul/13/bernanke-ready-for-more-quantitative-easing |title=Moody's sounds note of caution while Bernanke promises support for U.S. economy |first=Phillip |last=Inman |newspaper=The Guardian |date=14 July 2011 |access-date=19 July 2011}}</ref>
'''September 2012: QE3.''' A third round of quantitative easing, "QE3", was announced on 13 September 2012. In an 11–1 vote, the Federal Reserve decided to launch a new $40 billion per month, open-ended bond purchasing program of agency mortgage-backed securities. Additionally, the Federal Open Market Committee (FOMC) announced that it would likely maintain the federal funds rate near zero "at least through 2015".<ref name="qe3">{{cite news|last=Zumbrun|first=Joshua|title=Fed Undertakes QE3 With $40 Billion MBS Purchases Per Month|url=https://www.bloomberg.com/news/2012-09-13/fed-plans-to-buy-40-billion-in-mortgage-securities-each-month.html|access-date=13 September 2012|newspaper=Bloomberg News|date=13 September 2012}}</ref><ref>{{cite news|title=Federal Reserve issues FOMC statement |url=http://www.federalreserve.gov/newsevents/press/monetary/20121024a.htm|access-date=1 January 2013|work=Federal Reserve Board|date=12 January 2012}}</ref> According to NASDAQ.com, this is effectively a stimulus program that allows the Federal Reserve to relieve $40 billion per month of commercial housing market debt risk.<ref>{{cite news|last=Jensen|first=Greg|title=QE3 Launched: The Ever Decreasing Effects of Monetary Stimulus|url=http://community.nasdaq.com/News/2012-09/qe3-launched-the-ever-decreasing-effects-of-monetary-stimulus.aspx?storyid=174677|access-date=19 September 2012|work=NASDAQ|date=19 September 2012|archive-url=https://web.archive.org/web/20120920061522/http://community.nasdaq.com/News/2012-09/qe3-launched-the-ever-decreasing-effects-of-monetary-stimulus.aspx?storyid=174677|archive-date=20 September 2012|url-status=dead}}</ref> Because of its open-ended nature, QE3 has earned the popular nickname of "QE-Infinity".<ref>Jason Haver (14 September 2012). "[http://www.pretzelcharts.com/2012/09/qe-infinity-poking-holes-in-bernankes.html QE-Infinity: Poking Holes in Bernanke's Logic]". Accessed 18 August 2018.</ref>{{better source needed|reason=Blogs are generally not considered reliable sources|date=August 2018}} On 12 December 2012, the FOMC announced an increase in the amount of open-ended purchases from $40 billion to $85 billion per month.<ref>{{cite press release|url=http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm|date=12 December 2012|agency=Federal Reserve|title=Federal Reserve issues FOMC statement|access-date=18 August 2018}}</ref>
On 19 June 2013, Ben Bernanke announced a "tapering" of some of the Fed's QE policies contingent upon continued positive economic data. Specifically, he said that the Fed could scale back its bond purchases from $85 billion to $65 billion a month during the upcoming September 2013 policy meeting.<ref>{{cite web|url=http://www.foxbusiness.com/economy/2013/06/19/fed-decision-on-tap/|title=Bernanke Offers Possible Timetable for Tapering|author=Dunstan Prial|work=Fox Business|access-date=24 June 2013|archive-url=https://web.archive.org/web/20130622064449/http://www.foxbusiness.com/economy/2013/06/19/fed-decision-on-tap/|archive-date=22 June 2013|url-status=dead}}</ref><ref>{{cite book |last=Slatyer|first=Will|title=The Life/Death Rhythms of Capitalist Regimes - Debt Before Dishonour: Timetable of World Dominance 1400-2100.|publisher=Partridge Publishing Singapore|date=2015 |isbn=9781482829617|url=https://books.google.com/books?id=tprrCQAAQBAJ&dq=Fed+could+scale+back+its+bond+purchases+from+%2485+billion+to+%2465+billion+a+month+during+the+upcoming+September+2013&pg=PT329}}</ref> He also suggested that the bond-buying program could wrap up by mid-2014.<ref>{{cite news| url=https://www.bloomberg.com/news/2013-06-20/fed-seen-tapering-qe-to-65-billion-at-september-fomc-meeting.html | work=Bloomberg | title=Fed Seen by Economists Tapering QE at September Meeting}}</ref> While Bernanke did not announce an interest rate hike, he suggested that if inflation followed a 2% target rate and unemployment decreased to 6.5%, the Fed would likely start raising rates. The stock markets dropped by approximately 4.3% over the three trading days following Bernanke's announcement, with the Dow Jones dropping 659 points between 19 and 24 June, closing at 14,660 at the end of the day on 24 June.<ref>{{cite web|url=http://www.al.com/business/index.ssf/2013/06/dow_jones_down_43_percent_sinc.html|title=Dow Jones down 4.3 percent since Fed chair Ben Bernanke took the podium|work=AL.com|date=25 June 2013}}</ref> On 18 September 2013, the Fed decided to hold off on scaling back its bond-buying program,<ref>{{cite news| url=https://www.reuters.com/article/us-usa-fed-banks-analysis-idUSBRE98I07B20130919 | work=Reuters | title=Analysis: Time to taper? Not if you look at bank loans | date=19 September 2013}}</ref> and announced in December 2013 that it would begin to taper its purchases in January 2014.<ref>{{cite web|author=JeeYeon Park |url=https://www.cnbc.com/2013/12/18/fed-begins-taper-program.html |title=Fed to reduce bond purchases by $10 billion a month |publisher=CNBC |date=18 December 2013 |access-date=13 September 2018}}</ref> Purchases were halted on 29 October 2014<ref>{{cite news| url=https://www.nytimes.com/2014/10/30/business/federal-reserve-janet-yellen-qe-announcement.html | work=The New York Times | first=Binyamin | last=Appelbaum | title=Federal Reserve Caps Its Bond Purchases; Focus Turns to Interest Rates | date=29 October 2014}}</ref> after accumulating $4.5 trillion in assets.<ref>{{cite news| url=https://www.nytimes.com/2014/10/30/upshot/the-fed-has-not-stopped-trying-to-stimulate-the-economy.html?rref=upshot&abt=0002&abg=1 | newspaper=The New York Times | first=Justin | last=Wolfers | title=The Fed Has Not Stopped Trying to Stimulate the Economy | date=29 October 2014}}</ref> thumb|This is direct research on the Federal Funds Rate over the past 70 years from the Federal Reserve Bank of St. Louis. '''March 2020: QE4.'''{{Further|Economic impact of the COVID-19 pandemic}} thumb|Increase in US Federal Reserve assets in response to COVID-19 pandemic<ref>{{cite web |title=Credit and Liquidity Programs and the Balance Sheet |url=https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm}}</ref>
The Federal Reserve began conducting its fourth quantitative easing operation since the 2008 financial crisis; on 15 March 2020, it announced approximately $700 billion in new quantitative easing via asset purchases to support US liquidity in response to the COVID-19 pandemic.<ref>{{cite web|url=https://www.cnbc.com/2020/03/15/federal-reserve-cuts-rates-to-zero-and-launches-massive-700-billion-quantitative-easing-program.html | work=CNBC|date=15 March 2020|title=Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program}}</ref> As of mid-summer 2022 this resulted in an additional $2 trillion in assets on the books of the Federal Reserve.<ref>{{Cite web|url=https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm|title=Federal Reserve Board - Recent balance sheet trends|access-date=2026-03-28|website=Board of Governors of the Federal Reserve System}}</ref>
==== United Kingdom ==== thumb|Immediate and delayed effects of quantitative easing<ref>{{Cite web |url=https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2011/the-uks-quantitative-easing-policy-design-operation-and-impact.pdf |title=The United Kingdom's quantitative easing policy: design, operation and impact |access-date=30 June 2023}}</ref> The Bank of England's QE programme commenced in March 2009, when it purchased around £165 billion in assets as of September 2009 and around £175 billion in assets by the end of October 2009.<ref name="speech404">{{Cite web |url=http://www.bankofengland.co.uk/publications/speeches/2009/speech404.pdf |title=BOE Speeches in 2009 |access-date=27 December 2010 |archive-url=https://web.archive.org/web/20101231234932/http://www.bankofengland.co.uk/publications/speeches/2009/speech404.pdf |archive-date=31 December 2010 |url-status=dead}}</ref> Five further tranches of bond purchases between 2009 and November 2020 brought the peak QE total to £895 billion.<ref>{{Cite web|url=http://www.bankofengland.co.uk/monetary-policy/quantitative-easing|title=Quantitative easing|website=Bank of England}}</ref>
The Bank imposed a number of constraints on the QE policy, namely, that it would not buy more than 70% of any issue of government debt; and that it would only buy traditional (non-index-linked) debt, with a maturity of more than three years.<ref>{{cite news| url=https://www.bbc.co.uk/news/business-16538773 |work=BBC News | title=A flat economy (cont'd) | date=12 January 2012}}</ref> Originally, the bonds eligible for purchase were limited to UK government debt, but this was later relaxed to include high quality commercial bonds.<ref>{{cite web |url=http://www.bankofengland.co.uk/monetarypolicy/qe/amount.htm |title= Amount of Assets Purchased|website=Bank of England |archive-url=https://web.archive.org/web/20110102134736/http://www.bankofengland.co.uk/monetarypolicy/qe/amount.htm |archive-date=2 January 2011}}</ref>
QE was primarily designed as an instrument of monetary policy. The mechanism required the Bank of England to purchase government bonds on the secondary market, financed by the creation of new central bank money. This would have the effect of increasing the asset prices of the bonds purchased, thereby lowering yields and dampening longer term interest rates and making it cheaper for businesses to raise capital.<ref name="bean">{{cite web |last=Bean |first=Charles |author-link=Charlie Bean (economist) |date=July 2009 |title=Ask the Deputy Governor |url=http://www.bankofengland.co.uk/monetarypolicy/qe/askqa.htm |access-date=12 July 2010 |publisher=Bank of England |archive-date=26 July 2010 |archive-url=https://web.archive.org/web/20100726111216/http://www.bankofengland.co.uk/monetarypolicy/qe/askqa.htm |url-status=dead}}</ref> The aim of the policy was initially to ease liquidity constraints in the sterling reserves system, but evolved into a wider policy to provide economic stimulus. Another side effect is that investors will switch to other investments, such as shares, boosting their price and thus encouraging consumption.<ref name="boe">{{Cite book |url=http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf |title=Quantitative Easing explained |publisher=Bank of England |isbn=1-85730-114-5 |pages=7–9 |quote=(page 7) Bank buys assets from ... institutions ... credits the seller's bank account. So the seller has more money in their bank account, while their bank holds a corresponding claim against the Bank of England (known as reserves) ... (page 8) high-quality debt ... (page 9) ... such as shares or company bonds. That will push up the prices of those assets ... |access-date=20 July 2010 |archive-url=https://web.archive.org/web/20101030003754/http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf |archive-date=30 October 2010 |url-status=dead}}</ref> In 2012 the Bank estimated that quantitative easing had benefited households differentially according to the assets they hold; richer households have more assets.<ref>{{cite web |title=The Distributional Effects of Asset Purchases |url=https://www.bankofengland.co.uk/-/media/boe/files/news/2012/july/the-distributional-effects-of-asset-purchases-paper |website=Bank of England |access-date=4 January 2020 |date=12 July 2012}}</ref>
In February 2022 the Bank of England announced its intention to commence winding down the QE portfolio.<ref>{{cite web | url=https://www.bankofengland.co.uk/letter/2022/apf-letters-february-2022 | title=Exchange of letters between the Governor and the Chancellor on the Asset Purchase Facility – February 2022 | date=8 June 2023 |website=Bank of England}}</ref> Initially this would be achieved by not replacing tranches of maturing bonds, and would later be accelerated through active bond sales.
In August 2022 the Bank of England reiterated its intention to accelerate the QE wind down through active bond sales. This policy was affirmed in an exchange of letters between the Bank of England and the UK Chancellor of the Exchequer in September 2022.<ref>{{cite web | url=https://www.bankofengland.co.uk/letter/2022/september/quantitative-tightening-asset-sales-september-2022 | title=Exchange of letters between the Governor and the Chancellor on the Asset Purchase Facility – September 2022 | date=8 June 2023 |website=Bank of England}}</ref> Between February 2022 and September 2022, a total of £37.1bn of government bonds matured, reducing the outstanding stock from £875.0bn at the end of 2021 to £837.9bn. In addition, a total of £1.1bn of corporate bonds matured, reducing the stock from £20.0bn to £18.9bn, with sales of the remaining stock planned to begin on 27 September.
On 28 September 2022 the Bank of England issued a Market Notice announcing its intention to "carry out purchases of long dated gilts in a temporary and targeted way".<ref>{{cite web | url=https://www.bankofengland.co.uk/markets/market-notices/2022/september/market-notice-28-september-2022-gilt-market-operations | title=Gilt Market Operations – Market Notice 28 September 2022 | date=6 June 2023}}</ref> This was in response to market conditions in which the sterling exchange rate and bond asset pricing were significantly disrupted following a UK government fiscal statement.<ref>{{cite news | url=https://www.bbc.co.uk/news/business-63030208 | title=Pound hits record low after tax cut plans | work=BBC News | date=26 September 2022}}</ref> The Bank stated its announcement would apply to conventional gilts of residual maturity greater than 20 years in the secondary market. The existing constraints applicable to QE bond purchases would continue to apply. The funding of the purchases would be met from central bank reserves, but would be segregated in a different portfolio from existing asset purchases. The Bank also announced that its annual £80bn target to reduce the existing QE portfolio remained unchanged but, in the light of current market conditions, the beginning of gilt sale operations would be postponed to 31 October 2022.<ref>{{cite press release |url=https://www.bankofengland.co.uk/news/2022/september/bank-of-england-announces-gilt-market-operation | title=Bank of England announces gilt market operation | date=8 June 2023 |publisher=Bank of England}}</ref>
==== Eurozone ==== The European Central Bank engaged in large-scale purchase of covered bonds in May 2009,<ref>{{cite news|last=Duncan|first=Gary|date=8 May 2009|title=European Central Bank opts for quantitative easing to lift the eurozone |work=The Times |url=http://business.timesonline.co.uk/tol/business/economics/article6244869.ece|archive-url=https://web.archive.org/web/20090510020658/http://business.timesonline.co.uk/tol/business/economics/article6244869.ece|url-status=dead|archive-date=10 May 2009}}</ref> and purchased around €250 billion worth of sovereign bonds from targeted member states in 2010 and 2011 (the SMP Programme). However, until 2015 the ECB refused to openly admit they were doing quantitative easing.{{Citation needed|date=May 2022}}
In a dramatic change of policy, following the new Jackson Hole Consensus, on 22 January 2015 Mario Draghi, President of the European Central Bank, announced an "expanded asset purchase programme", where €60 billion per month of euro-area bonds from central governments, agencies and European institutions would be bought.<ref>{{Cite news |last1=Jolly |first1=David |last2=Ewing |first2=Jack |date=2015-01-22 |title=E.C.B. Stimulus Calls for 60 Billion Euros in Monthly Bond-Buying |work=The New York Times |url=https://www.nytimes.com/2015/01/23/business/european-central-bank-bond-buying.html |access-date=2022-05-11 |issn=0362-4331}}</ref>
Beginning in March 2015, the stimulus was planned to last until September 2016 at the earliest with a total QE of at least €1.1 trillion. Mario Draghi announced the programme would continue: "until we see a continued adjustment in the path of inflation", referring to the ECB's need to combat the growing threat of deflation across the eurozone in early 2015.<ref>{{cite web|url=https://www.ecb.europa.eu/press/pr/date/2015/html/pr150122_1.en.html|title=ECB: ECB announces expanded asset purchase programme|work=europa.eu|date=22 January 2015}}</ref><ref>{{cite news|url=https://www.bbc.co.uk/news/business-30933515|title=ECB unveils massive QE boost for eurozone|work=BBC News | date=22 January 2015}}</ref>
In March 2016, the ECB increased its monthly bond purchases to €80 billion from €60 billion and started to include corporate bonds under the asset purchasing programme and announced new ultra-cheap four-year loans to banks. From November 2019, the ECB resumed buying up eurozone government bonds at a rate of €20 billion in an effort to encourage governments to borrow more and spend in domestic investment projects.<ref>{{Cite web |date=2019-09-12 |title=Monetary policy decisions |url=https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.mp190912~08de50b4d2.en.html |access-date=2022-05-11 |website=European Central Bank}}</ref> In March 2020, to help the economy absorb the shock of the COVID-19 crisis, the ECB announced a €750 billion Pandemic Emergency Purchase Programme (PEPP).<ref>{{Cite journal |date=2020-03-18 |title=ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP) |journal=ECB Europa |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html}}</ref> The aim of the stimulus package (PEPP) was to lower borrowing costs and increase lending in the euro area.<ref>{{Cite journal |url=https://www.ecb.europa.eu/home/search/coronavirus/html/index.en.html |title=Our response to coronavirus (COVID-19) |journal=European Central Bank |date=19 February 2021}}</ref>
==== Switzerland ==== At the beginning of 2013, the Swiss National Bank had the largest balance sheet relative to the size of its economy. It was responsible for close to 100% of Switzerland's national output. A total of 12% of its reserves were in foreign equities. By contrast, the US Federal Reserve's holdings equated to about 20% of US GDP, while the European Central Bank's assets were worth 30% of GDP.<ref>{{cite news|last1=Blackstone|first1=Brian|last2=Wessel|first2=David|date=8 January 2013|title=Button-Down Central Bank Bets It All|newspaper=The Wall Street Journal|url=https://www.wsj.com/articles/SB10001424127887323689604578221470075341686}}</ref>
The SNB's balance sheet has increased massively due to its QE program, to the extent that in December 2020, the US treasury accused Switzerland of being a "currency manipulator". The US administration recommended that Switzerland increase the retirement age for Swiss workers to reduce saving assets by the Swiss social security administration, in order to boost domestic demand and reduce the necessity to maintain QE to stabilize the parity between the dollar and the Swiss franc.<ref>Meier, Markus Diem. (16 December 2020) [https://www.tagesanzeiger.ch/die-usa-verlangen-von-der-schweiz-erhoehung-des-rentenalters-981165604068 "Die USA verlangen von der Schweiz Erhöhung des Rentenalters"] (in German). ''Tages-Anzeiger''. Retrieved 17 December 2020.</ref>
==== Sweden ==== Sveriges Riksbank launched quantitative easing in February 2015, announcing government bond purchases of nearly 1.2 billion USD.<ref name="bbc2015feb12SNBqe">[https://www.bbc.co.uk/news/business-31436657 Sweden cuts rates below zero and starts QE] BBC News, Business, 12 February 2015</ref> The annualized inflation rate in January 2015 was −0.3%, and the bank implied that Sweden's economy could slide into deflation.<ref name="bbc2015feb12SNBqe" /> The Swedish Bank continued buying large amounts of government bonds through 2019. They then expanded QE policy through the COVID-19 pandemic in 2020 and 2021 and gradually brought down purchases by 2022.<ref>{{Cite journal |last=Anderson |first=Richard G. |date=2012 |title=Quantitative Easing the Swedish Way |url=https://doi.org/10.20955/es.2012.33 |journal=Economic Synopses |volume=2012 |issue=33 |doi=10.20955/es.2012.33}}</ref>
==== Japan after 2007 and Abenomics ==== {{See also|Abenomics}} In early October 2010, the Bank of Japan (BOJ) announced that it would examine the purchase of ¥5 trillion (US$60 billion) in assets. This was an attempt to push down the value of the yen against the US dollar to stimulate the domestic economy by making Japanese exports cheaper; however, it was ineffective.<ref>"[http://www.oyetimes.com/business/44-markets/7045-quantitative-easing Quantitative Easing – A lesson learned from Japan]". ''Oye Times''.</ref>
On 4 August 2011 the BOJ announced a unilateral move to increase the commercial bank current account balance from ¥40 trillion (US$504 billion) to a total of ¥50 trillion (US$630 billion).<ref>{{cite news| url=https://www.bbc.co.uk/news/business-14398392 |work=BBC News | title=Japan government and central bank intervene to cut yen | date=4 August 2011}}</ref><ref>[http://www.bankingtimes.co.uk/2011/08/04/bank-of-japan-increases-qe-by-10-trillion-yen/ Bank of Japan increases QE by 10 trillion yen] {{Webarchive|url=https://web.archive.org/web/20111006001432/http://www.bankingtimes.co.uk/2011/08/04/bank-of-japan-increases-qe-by-10-trillion-yen/ |date=6 October 2011}}. ''Banking Times'' (4 August 2011).</ref> In October 2011, the bank expanded its asset purchase program by ¥5 trillion ($66bn) to a total of ¥55 trillion.<ref>{{cite news| url=https://www.bbc.co.uk/news/business-15472839 |work=BBC News | title=Bank of Japan increases stimulus and keeps rates low | date=27 October 2011}}</ref>
On 4 April 2013, the Bank of Japan announced that it would expand its asset purchase program by ¥60 trillion to ¥70 trillion per year.<ref>{{cite web|publisher=Bank of Japan|url=https://www.boj.or.jp/en/mopo/outline/qqe.htm/|title='Price Stability Target' of 2 Percent and 'Quantitative and Qualitative Monetary Easing with Yield Curve Control'|access-date=18 August 2018|archive-date=14 April 2023|archive-url=https://web.archive.org/web/20230414180636/https://www.boj.or.jp/en/mopo/outline/qqe.htm|url-status=dead}}</ref> The bank hoped to banish deflation and achieve an inflation rate of 2% within two years. This would be achieved through a QE program worth US$1.4 trillion, an amount so large it is expected to double the money supply.<ref>{{cite news |url=https://www.theguardian.com/business/2013/apr/04/japan-quantitative-easing-70bn | title=Japan aims to jump-start economy with $1.4tn of quantitative easing | first=Heather | last=Stewart | work=The Guardian | date=4 April 2013 | location=London}}</ref> This policy has been named Abenomics, a portmanteau of economic policies from Shinzō Abe, the former Prime Minister of Japan.
On 31 October 2014, the BOJ announced the expansion of its bond buying program, to purchase ¥80 trillion of bonds a year.<ref>{{cite web|url=https://www.boj.or.jp/en/announcements/release_2014/k141031a.pdf|title=Expansion of the Quantitative and Qualitative Monetary Easing|date=31 October 2014|access-date=18 August 2018|publisher=Bank of Japan}}</ref>
In addition to purchases of bonds, Governor Masaaki Shirakawa also directed the BOJ to begin purchasing corporate shares as well as debt securities in October 2010. The BOJ came up with a policy to purchase index ETFs as part of the 2010 Comprehensive Monetary Easing program, which initially placed a cap of ¥450 billion shares with a termination in December 2011. However, later Governor Haruhiko Kuroda replaced the program with the Quantitative and Qualitative Monetary Easing policy which empowered the BOJ to buy ETFs with no cap or termination date, with an increased annual target of ¥1 trillion. The cap was raised multiple times to over ¥19 trillion by March 2018. And on March 16, 2020, following the COVID-19 pandemic, the BOJ doubled its annual ETF purchase target to ¥12 trillion.<ref name=":2">{{Cite journal |last1=Charoenwong |first1=Ben |last2=Morck |first2=Randall |last3=Wiwattanakantang |first3=Yupana |date=2021-05-14 |title=Bank of Japan Equity Purchases: The (Non-)Effects of Extreme Quantitative Easing* |url=https://academic.oup.com/rof/article/25/3/713/5924382 |journal=Review of Finance |volume=25 |issue=3 |pages=713–743 |doi=10.1093/rof/rfaa029 |issn=1572-3097}}</ref>
== Effectiveness of QE == The effectiveness of quantitative easing is the subject of an intense dispute among researchers as it is difficult to separate the effect of quantitative easing from other contemporaneous economic and policy measures, such as negative rates.
Former Federal Reserve Chairman Alan Greenspan calculated that as of July 2012, there was "very little impact on the economy".<ref>Navarro, Bruno J. (12 July 2012). "[https://finance.yahoo.com/news/alan-greenspan-sees-two-separate-161122638.html CNBC Coverage of Greenspan]". Finance.yahoo.com. {{webarchive|url=https://web.archive.org/web/20120718001743/https://finance.yahoo.com/news/alan-greenspan-sees-two-separate-161122638.html|date=18 July 2012}}</ref> Bank deposits in the Fed increased by nearly $4 trillion during QE1-3, closely tracking Fed bond purchases. A different assessment has been offered by Federal Reserve Governor Jeremy Stein, who has said that measures of quantitative easing such as large-scale asset purchases "have played a significant role in supporting economic activity".<ref name="federalreserve">{{Cite web|date=11 October 2012|title=Speech by Governor Stein on evaluating large-scale asset purchases|url=https://www.federalreserve.gov/newsevents/speech/stein20121011a.htm|website=Board of Governors of the Federal Reserve System}}</ref>
While the literature on the topic has grown over time, it has also been shown that central banks' own research on the effectiveness of quantitative easing tends to be optimistic in comparison to research by independent researchers,<ref>{{Cite web|last1=Kempf|first1=Elisabeth|last2=Pastor|first2=Lubos|date=2020-10-05|title=Fifty shades of QE: Central bankers versus academics|url=https://voxeu.org/article/fifty-shades-qe-central-bankers-versus-academics|access-date=2021-03-30|website=VoxEU.org}}</ref> which could indicate a conflict of interest or cognitive bias in central bank research.
Several studies published in the aftermath of the crisis found that quantitative easing in the US has effectively contributed to lower long term interest rates on a variety of securities as well as lower credit risk. This boosted GDP growth and modestly increased inflation.<ref>Gilchrist, Simon, and Egon Zakrajšek. "The Impact of the Federal Reserve's Large‐Scale Asset Purchase Programs on Corporate Credit Risk". ''Journal of Money, Credit and Banking'' 45.s2 (2013): 29–57.</ref><ref>Gagnon, Joseph, et al. "Large-scale asset purchases by the Federal Reserve: did they work?" (2010).</ref><ref>Cúrdia, Vasco, and Andrea Ferrero. "How stimulatory are large-scale asset purchases?" ''FRBSF Economic Letter'' 22 (2013): 1–5.</ref><ref>Chen, Han, Vasco Cúrdia, and Andrea Ferrero. "The macroeconomic effects of large‐scale asset purchase programmes". ''The economic journal'' 122.564 (2012).</ref><ref>Gagnon, Joseph, et al. "The financial market effects of the Federal Reserve's large-scale asset purchases". ''International Journal of Central Banking'' 7.1 (2011): 3–43.</ref><ref>{{cite news|last=Irwin|first=Neil|date=31 October 2014|title=Quantitative Easing is Ending. Here's What It Did, in Charts|newspaper=The New York Times|url=https://www.nytimes.com/2014/10/30/upshot/quantitative-easing-is-about-to-end-heres-what-it-did-in-seven-charts.html?ref=economy&abt=0002&abg=1}}</ref> A predictable but unintended consequence of the lower interest rates was to drive investment capital into equities, thereby inflating the value of equities relative to the value of goods and services, and increasing the wealth gap between the wealthy and working class.
In the Eurozone, studies have shown that QE successfully averted deflationary spirals in 2013–2014, and prevented the widening of bond yield spreads between member states.<ref>{{Cite book |last=Marcello |first=Siklos |display-authors=et al |title=The ECB's Asset Purchase Programmes |year=2020 |publisher=European Parliament |isbn=978-92-846-7120-5 |oclc=1222784406}}</ref> QE also helped reduce bank lending cost.<ref>{{Cite journal |last1=Blattner |first1=Laura |last2=Nogueira |first2=Gil |date=2016 |title=The Effect of Quantitative Easing on Lending Conditions |url=http://dx.doi.org/10.2139/ssrn.2749128 |journal=SSRN Electronic Journal |doi=10.2139/ssrn.2749128 |issn=1556-5068}}</ref> However, the real effect of QE on GDP and inflation remained modest<ref>{{Cite book |title=The ECB's Asset Purchase Programmes |year=2020 |last=Marcello |first=Siklos |display-authors=et al |isbn=978-92-846-7095-6 |publisher=European Central Bank |location=Brussels |oclc=1222783951}}</ref><ref>{{Cite journal |last1=Gambetti |first1=Luca |last2=Musso |first2=Alberto |date=June 2017 |title=The macroeconomic impact of the ECB's expanded asset purchase programme (APP) |journal=Working Paper Series |url=https://ideas.repec.org/p/ecb/ecbwps/20172075.html}}</ref> and very heterogeneous depending on methodologies used in research studies, which find on GDP comprised between 0.2% and 1.5% and between 0.1 and 1.4% on inflation. Model-based studies tend to find a higher impact than empirical ones.{{Citation needed|date=April 2021|reason=This is a polarizing conclusion with implications for the entire page/topic, and does not immediately follow from the previously cited facts. A specific citation here would be informative and could lead to further high quality discussion resulting in a higher quality page.}}
In Japan, focusing on equity purchases, studies have shown that QE successfully boosted stock prices,<ref>{{Cite journal |last1=Barbon |first1=Andrea |last2=Gianinazzi |first2=Virginia |date=2019-12-01 |title=Quantitative Easing and Equity Prices: Evidence from the ETF Program of the Bank of Japan |url=https://academic.oup.com/raps/article/9/2/210/5572128 |journal=The Review of Asset Pricing Studies |volume=9 |issue=2 |pages=210–255 |doi=10.1093/rapstu/raz008 |issn=2045-9920|url-access=subscription}}</ref><ref name=":2" /> but appear to have not been successful in stimulating corporate investment.<ref name=":2" />
==Risks and side-effects== Quantitative easing may cause higher inflation than desired if the amount of easing required is overestimated and too much money is created by the purchase of liquid assets.<ref name="bowlby fear">{{cite news|url=http://news.bbc.co.uk/2/hi/business/7925981.stm|title=The fear of printing too much money|last=Bowlby|first=Chris|date=5 March 2009|access-date=25 June 2011|work=BBC News}}</ref> On the other hand, QE can fail to spur demand if banks remain reluctant to lend money to businesses and households. Even then, QE can still ease the process of deleveraging as it lowers yields. However, there is a time lag between monetary growth and inflation; inflationary pressures associated with money growth from QE could build before the central bank acts to counter them.<ref>{{cite journal|last=Thornton|first=Daniel L.|year=2010|title=The downside of quantitative easing|url=http://research.stlouisfed.org/publications/es/10/ES1034.pdf|journal=Federal Reserve Bank of St. Louis Economic Synopses|issue=34}}</ref> Inflationary risks are mitigated if the system's economy outgrows the pace of the increase of the money supply from the easing.{{Citation needed|date=November 2019}} If production in an economy increases because of the increased money supply, the value of a unit of currency may also increase, even though there is more currency available. For example, if a nation's economy were to spur a significant increase in output at a rate at least as high as the amount of debt monetized the inflationary pressures would be equalized. This can only happen if member banks actually lend the excess money out instead of hoarding the extra cash.{{Citation needed|date=November 2019}} During times of high economic output, the central bank always has the option of restoring reserves to higher levels through raising interest rates or other means, effectively reversing the easing steps taken.
Economists such as John Taylor<ref>John B. Taylor, The Fed's New View is a Little Less Scary, 20 June 2013 blog post [http://economicsone.com/2013/06/20/the-feds-new-view-is-a-little-less-scary/]</ref> believe that quantitative easing creates unpredictability. Since the increase in bank reserves may not immediately increase the money supply if held as excess reserves, the increased reserves create the danger that inflation may eventually result when the reserves are loaned out.<ref>John Taylor, Stanford, 2012 testimony before House Financial Service Committee, page two [http://financialservices.house.gov/uploadedfiles/hhrg-112-ba19-wstate-jtaylor-20120508.pdf], retrieved 20 October 2013.</ref>
QE benefits debtors; since the interest rate has fallen, there is less money to be repaid. However, it directly harms creditors as they earn less money from lower interest rates. Devaluation of a currency also directly harms importers and consumers, as the cost of imported goods is inflated by the devaluation of the currency.<ref>{{cite news|url=https://www.theguardian.com/business/2011/jun/29/how-world-paid-hidden-cost-america-quantitative-easing|title=How the world paid the hidden cost of America's quantitative easing|last=Inman|first=Phillip|date=29 June 2011|work=The Guardian|location=London}}</ref>
=== Impact on savings and pensions === In the European Union, World Pensions Council (WPC) financial economists have also argued that artificially low government bond interest rates induced by QE will have an adverse impact on the underfunding condition of pension funds, since "without returns that outstrip inflation, pension investors face the real value of their savings declining rather than ratcheting up over the next few years".<ref name="Reuters">{{Cite news|url=http://uk.mobile.reuters.com/article/businessNews/idUKBRE8720T320120803|title=Zero return world leaves pension savers stuck |last=Cruise |first=Sinead |date=3 August 2012|work=Reuters |access-date=5 August 2012}}</ref><ref name="Plan Sponsor">{{Cite news|url=http://plansponsor.com/Europe/OpinionsArticle.aspx?id=6442491682|title=Europe's Pension Predicament: the Broken Bismarckian Promise |last=Firzli |first=M. Nicolas J. |date=1 March 2013|work=Plan Sponsor|access-date=1 March 2013|archive-url=https://web.archive.org/web/20130506065059/http://www.plansponsor.com/Europe/OpinionsArticle.aspx?id=6442491682|archive-date=6 May 2013|url-status=dead}}</ref> In addition to this, low or negative interest rates create disincentives for saving.<ref name=":0">{{Cite web|url=https://calrev.org/2019/05/04/on-the-causes-of-european-political-instability/|title=On the Causes of European Political Instability|last=Henderson|first=Isaiah M.|date=4 May 2019|website=The California Review|access-date=19 July 2019}}</ref> In a way this is an intended effect, since QE is intended to spur consumer spending.<ref>{{Citation |last=Cecchetti |first=Stephen G. |title=Inflation Indicators and Inflation Policy |date=January 1995 |work=NBER Macroeconomics Annual 1995, Volume 10 |pages=189–236 |url=https://www.nber.org/books-and-chapters/nber-macroeconomics-annual-1995-volume-10/inflation-indicators-and-inflation-policy |access-date=2025-12-17 |publisher=MIT Press}}</ref>
=== Effects on climate change === In Europe, central banks operating corporate quantitative easing (i.e., QE programmes that include corporate bonds) such as the European Central Bank or the Swiss National Bank, have been increasingly criticized by NGOs<ref>{{Cite web|title=ECB cash injections for polluters must stop, 70 NGOs demand|publisher=Corporate Europe Observatory|url=https://corporateeurope.org/en/pressreleases/2017/03/ecb-cash-injections-polluters-must-stop-70-ngos-demand|access-date=2020-11-28|website=corporateeurope.org}}</ref> for not taking into account the climate impact of the companies issuing the bonds.<ref>{{Cite web|title=ECB's purchasing policies skewed towards carbon-intensive industries - report|url=https://www.greenpeace.org/eu-unit/issues/climate-energy/45166/ecb-purchasing-policies-skewed-towards-carbon-intensive-industries|access-date=2020-11-28|website=Greenpeace European Unit}}</ref><ref>{{Cite web|title=The ECB's dirty quantitative easing|url=https://reclaimfinance.org/site/en/the-ecbs-dirty-quantitative-easing/|access-date=2020-11-28|website=Reclaim Finance}}</ref><ref>{{Cite web|last1=Dafermos|first1=Yannis|last2=Gabor|first2=Daniela|last3=Nikolaidi|first3=Maria|last4=Pawloff|first4=Adam|last5=Lerven|first5=Frank van|title=Decarbonising is easy|url=https://neweconomics.org/2020/10/decarbonising-is-easy|access-date=2020-11-28|website=New Economics Foundation}}</ref><ref>{{Cite news|last=Jourdan, Kalinowski|date=2019-04-04|title=REPORT: Aligning monetary policy with the EU's climate targets|url=https://www.positivemoney.eu/2019/04/report-aligning-ecb-monetary-policy-climate/|access-date=2020-11-28|website=Positive Money Europe}}</ref> In effect, Corporate QE programmes are perceived as indirect subsidy to polluting companies. The European Parliament has also joined the criticism by adopting several resolutions on the matter, and has repeatedly called on the ECB to reflect climate change considerations in its policies.<ref>{{Cite web|date=2020-12-02|title=ECB policy is working, but new challenges need new responses |url=https://www.europarl.europa.eu/news/en/press-room/20200206IPR72014/ecb-policy-is-working-but-new-challenges-need-new-responses|access-date=2020-11-28|website=www.europarl.europa.eu}}</ref><ref>{{Cite web|last=Vasto|first=Alessia Del|date=2021-02-11|title=EU Parliament pressures ECB to address climate change|url=http://www.positivemoney.eu/2021/02/ep-ecb-climate-change/|access-date=2021-03-30|website=Positive Money Europe}}</ref>
Central banks have usually responded by arguing they had to follow the principle of "market neutrality"<ref>{{Cite web|title=Climate change and central banks|url=https://www.bundesbank.de/en/press/speeches/climate-change-and-central-banks-812618|access-date=2020-11-28|website=Deutsche Bundesbank}}</ref> and should therefore refrain from making discretionary choices when selecting bonds on the market. The notion that central banks can be market neutral is contested, as central banks always make choices that are not neutral for financial markets when implementing monetary policy.<ref>{{Cite web|last1=Colesanti Senni|first1=Chiara|last2=Monnin|first2=Pierre|date=2020-10-16|title=Central Bank Market Neutrality is a Myth|url=https://www.cepweb.org/central-bank-market-neutrality-is-a-myth/|access-date=2021-03-30|website=Council on Economic Policies}}</ref> Furthermore, research has demonstrated that, in the case of the ECB's corporate bond purchase programme, the principle of market neutrality is not a practical reality, as the ECB's purchases are concentrated on economic sectors that are not representative of the wider economy, and tend to be skewed towards carbon-intensive firms.<ref>Papoutsi, M., Piazzesi, M. and Schneider, M., (2022), [https://web.stanford.edu/~piazzesi/How_unconventional_is_green_monetary_policy.pdf How unconventional is green monetary policy], Working Paper.</ref>
Following this criticism, in 2020, several top level ECB policymaker such as Christine Lagarde,<ref>{{Cite web|date=2020-10-15|title=ECB will consider dropping market neutrality – Lagarde|url=https://www.centralbanking.com/node/7698076|access-date=2020-11-28|website=Central Banking}}</ref> Isabel Schnabel, Frank Elderson<ref>{{Cite web|date=2021-02-16|title=ECB market neutrality crumbling|url=https://www.omfif.org/2021/02/ecb-market-neutrality-crumbling/|access-date=2021-03-30|website=OMFIF}}</ref> and others have pointed out the contradiction in the market neutrality logic. In particular, Schnabel argued that "In the presence of market failures, market neutrality may not be the appropriate benchmark for a central bank when the market by itself is not achieving efficient outcomes"<ref>{{Cite journal |last=Schnabel |first=Isabel |date=2020-09-28 |title=When markets fail – the need for collective action in tackling climate change |url=https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200928_1~268b0b672f.en.html |journal=ECB Europa}}</ref>
Since 2020, several central banks (including the ECB, Bank of England and the Swedish central banks) have announced their intention to incorporate climate criteria in their QE programs.<ref>{{Cite web|title=Bank of England considering attaching climate conditions to asset purchases|url=https://www.financialreporter.co.uk/finance-news/bank-of-england-considering-attaching-climate-conditions-to-asset-purchases.html|access-date=2020-11-28|website=Financial Reporter}}</ref> The Network for Greening the Financial System has identified different possible measures to align central banks' collateral frameworks and QE with climate objectives.<ref>{{Cite web|date=2021-03-24|title=Adapting central bank operations to a hotter world: Reviewing some options|url=https://www.ngfs.net/en/adapting-central-bank-operations-hotter-world-reviewing-some-options|access-date=2021-03-30|website=Banque de France}}</ref>
=== Increased income and wealth inequality === Critics frequently point to the redistributive effects of quantitative easing. For instance, British Prime Minister Theresa May openly criticized QE in July 2016 for its regressive effects: "Monetary policy – in the form of super-low interest rates and quantitative easing – has helped those on the property ladder at the expense of those who can't afford to own their own home."<ref>{{cite news|url=https://www.independent.co.uk/voices/theresa-may-what-kind-of-prime-minister-policies-what-she-really-meant-a7130911.html|title=This is what Theresa May said about the kind of Prime Minister she'll be – and what she really meant|date=11 July 2016|work=The Independent|access-date=13 September 2018}}</ref> Dhaval Joshi of BCA Research wrote that "QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it".<ref name="CNBC12">{{cite web|url=https://www.cnbc.com/2012/09/14/does-quantitative-easing-mainly-help-the-rich.html|title=Does Quantitative Easing Mainly Help the Rich?|last=Frank|first=Robert|publisher=CNBC|access-date=21 May 2013|date=14 September 2012}}</ref> Anthony Randazzo of the Reason Foundation wrote that QE "is fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy. It is a primary driver of income inequality".<ref name="CNBC12" />
Those criticisms are partly based on some evidence provided by central banks themselves. In 2012, a Bank of England report<ref>{{cite web|url=http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb120306.pdf|title=Quarterly Bulletins|date=15 August 2018|publisher=Bank of England|access-date=13 September 2018|archive-date=22 July 2017|archive-url=https://web.archive.org/web/20170722174419/http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb120306.pdf|url-status=dead}}</ref> showed that its quantitative easing policies had benefited mainly the wealthy, and that 40% of those gains went to the richest 5% of British households.<ref name="CNBC12" /><ref name="TG">{{cite news|url=https://www.theguardian.com/business/2012/aug/23/britains-richest-gained-quantative-easing-bank|title=Britain's richest 5% gained most from quantitative easing – Bank of England|last=Elliott|first=Larry|date=23 August 2012|work=The Guardian|access-date=21 May 2013|location=London}}</ref>
In May 2013, Federal Reserve Bank of Dallas President Richard Fisher said that cheap money has made rich people richer, but has not done quite as much for working Americans.<ref>{{cite news|url=https://www.cnbc.com/2013/05/20/qe-halt-would-be-too-violent-for-market-feds-fisher.html|title=QE Halt Would Be 'Too Violent' for Market: Fed's Fisher|last=Belvedere|first=Matthew J.|work=CNBC|access-date=20 May 2013}}</ref>
Answering similar criticisms expressed by MEP Molly Scott Cato, the president of the ECB Mario Draghi once declared:<ref>{{Cite web|url=https://www.ecb.europa.eu/pub/pdf/annex/ecb.sp150615_1_transcript.en.pdf?b53eca0ceadee20f23e15f463bb7a1eb|title=Transcript of Monetary Dialogue, 15 June 2015|access-date=22 July 2016}}</ref> <blockquote>Some of these policies may, on the one hand, increase inequality but, on the other hand, if we ask ourselves what the major source of inequality is, the answer would be unemployment. So, to the extent that these policies help – and they are helping on that front – then certainly an accommodative monetary policy is better in the present situation than a restrictive monetary policy.</blockquote>In July 2018, the ECB published a study<ref>{{Cite web|date=July 2018|title=Monetary policy and household inequality|url=https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2170.en.pdf|publisher=ECB}}</ref> showing that its QE program increased the net wealth of the poorest fifth of the population by 2.5 percent, compared with just 1.0 percent for the richest fifth. The study's credibility was however contested.<ref>{{Cite news|url=https://www.france24.com/en/20180718-economists-find-ecb-stimulus-shrank-eurozone-inequality|title=Economists find ECB stimulus shrank eurozone inequality|date=18 July 2018|work=France 24|access-date=27 September 2018}}</ref><ref>{{Cite web|last1=Jourdan|first1=Stanislas|last2=Fontan|date=2017-05-10|title=How The ECB Boosts Inequality And What It Can Do About It|url=https://www.socialeurope.eu/ecb-boosts-inequality-can|access-date=2021-03-30|website=Social Europe}}</ref>
=== International spillovers for BRICS and emerging economies ===
Quantitative easing (QE) policies can have a profound effect on Forex rates, since it changes the supply of one currency compared to another. For instance, if both the US and Europe are using quantitative easing to the same degree then the currency pair of US/EUR may not fluctuate. However, if the US treasury uses QE to a higher degree, as evidenced in the increased purchase of securities during an economic crisis, but India does not, then the value of the USD will decrease relative to the Indian rupee. As a result, quantitative easing has the same effect as purchasing foreign currencies, effectively manipulating the value of one currency compared to another.<ref>[https://www.managementstudyguide.com/quantitative-easing-and-forex-market.htm Quantitative Easing and the Forex Market]. ''Management Study Guide''. Retrieved 18 December 2020.</ref><ref>Fernandez, Rodrigo; Bortz, Pablo; Zeolla, Nicolas. [https://www.somo.nl/the-politics-of-quantitative-easing/ The politics of quantitative easing] SOMO, June 2018.</ref>
In a 2012 joint statement, the leaders of Russia, Brazil, India, China and South Africa, collectively BRICS, condemned the policies of western economies saying "It is critical for advanced economies to adopt responsible macro-economic and financial policies, avoid creating excessive liquidity and undertake structural reforms to lift growth" as written in the Telegraph.<ref>{{cite news |last=Blackden |first=Richard |date=29 March 2012 |title=BRICs attack QE and urge Western leaders to be 'responsible' |url=https://www.telegraph.co.uk/finance/economics/9174292/BRICs-attack-QE-and-urge-Western-leaders-to-be-responsible.html |url-access=subscription |url-status=live |archive-url=https://ghostarchive.org/archive/20220112/https://www.telegraph.co.uk/finance/economics/9174292/BRICs-attack-QE-and-urge-Western-leaders-to-be-responsible.html |archive-date=12 January 2022 |access-date=7 October 2019 |work=Daily Telegraph}}{{cbignore}}</ref> Additionally, the BRICS countries have criticized the QE carried out by the central banks of developed nations. They share the argument that such actions amount to protectionism and competitive devaluation. As net exporters whose currencies are partially pegged to the dollar, they protest that QE causes inflation to rise in their countries and penalizes their industries.<ref>Jeff Black and Zoe Schneeweis, [https://www.bloomberg.com/news/2013-01-26/china-central-banker-sees-potential-growth-near-8-percent-1-.html China's Yi Warns on Currency Wars as Yuan in Equilibrium], ''Bloomberg News'', 26 January 2013</ref><ref>John Paul Rathbone and Jonathan Wheatley, [http://www.ft.com/intl/cms/s/0/69c0b800-032c-11e2-a484-00144feabdc0.html#axzz2J7mbBqj1 Brazil's finance chief attacks US over QE3], ''Financial Times'', 20 September 2012.</ref><ref>Richard Blackden, [https://www.telegraph.co.uk/finance/economics/9196089/Brazil-president-Dilma-Rousseff-blasts-Western-QE-as-monetary-tsunami.html Brazil president Dilma Rousseff blasts Western QE as monetary tsunami], ''The Daily Telegraph'' (London), 10 April 2012</ref><ref>Michael Steen and Alice Ross, [http://www.ft.com/intl/cms/s/0/be46934e-64b7-11e2-ac53-00144feab49a.html Warning on new currency war], ''Financial Times'', 22 January 2013.</ref>
According to Bloomberg reporter David Lynch, the new money from quantitative easing could be used by the banks to invest in emerging markets, commodity-based economies, commodities themselves, and non-local opportunities rather than to lend to local businesses that are having difficulty getting loans.<ref>{{cite news|last=Lynch|first=David J.|date=17 November 2010|title=Bernanke's 'Cheap Money' Stimulus Spurs Corporate Investment Outside U.S|work=Bloomberg|url=https://www.bloomberg.com/news/2010-11-17/bernanke-s-cheap-money-stimulus-spurs-corporate-investment-outside-u-s-.html}}</ref>
=== Moral hazard === Another criticism prevalent in Europe,<ref>{{Cite news|last=Eichengreen|first=Barry|date=11 June 2019|title=Critics of quantitative easing should consider the alternative |work=The Guardian|url=https://www.theguardian.com/business/2019/jun/11/quantitative-easing-qe-recession|access-date=7 October 2019|issn=0261-3077}}</ref> is that QE creates moral hazard for governments. Central banks’ purchases of government securities artificially depress the cost of borrowing. Normally, governments issuing additional debt see their borrowing costs rise, which discourages them from overdoing it. In particular, market discipline in the form of higher interest<ref>{{Cite journal |last1=Bernanke |first1=Ben S. |last2=Reinhart |first2=Vincent R. |date=2004 |title=Conducting Monetary Policy at Very Low Short-Term Interest Rates |url=https://www.jstor.org/stable/3592862 |journal=The American Economic Review |volume=94 |issue=2 |pages=85–90 |doi=10.1257/0002828041302118 |jstor=3592862 |issn=0002-8282}}</ref> rates will cause a government like Italy's, tempted to increase deficit spending, to think twice. Not so, however, when the central bank acts as bond buyer of last resort and is prepared to purchase government securities without limit. In such circumstances, market discipline will be incapacitated.
=== Reputational risks === Richard W. Fisher, president of the Federal Reserve Bank of Dallas, warned in 2010 that QE carries "the risk of being perceived as embarking on the slippery slope of debt monetization. We know that once a central bank is perceived as targeting government debt yields<ref name=":0" /> at a time of persistent budget deficits, concern about debt monetization quickly arises." Later in the same speech, he stated that the Fed is monetizing the government debt: "The math of this new exercise is readily transparent: The Federal Reserve will buy $110 billion a month in Treasuries, an amount that, annualized, represents the projected deficit of the federal government for next year. For the next eight months, the nation's central bank will be monetizing the federal debt."<ref>[http://dallasfed.org/news/speeches/fisher/2010/fs101108.cfm Speeches by Richard W. Fisher]. Dallas Fed (8 November 2010).</ref><ref>{{Cite journal |last1=Dias |first1=Daniel A. |last2=Scott |first2=Sophia C. |year=2025|title=Monetary Policy and Bank Funding Costs: Patterns and Predictability in the Transmission of the Policy Rate to U.S. Banks' Funding Costs |journal=Finance and Economics Discussion Series |url=https://www.federalreserve.gov/econres/feds/monetary-policy-and-bank-funding-costs.htm |series=Finance and Economics Discussion Series 2025-083 |issue=2025–083 |location=Washington |publisher=Board of Governors of the Federal Reserve System |doi=10.17016/FEDS.2025.083}}</ref>
Ben Bernanke remarked in 2002 that the US government had a technology called the printing press (or, today, its electronic equivalent), so that if rates reached zero and deflation threatened, the government could always act to ensure deflation was prevented. He said, however, that the government would not print money and distribute it "willy nilly" but would rather focus its efforts in certain areas (e.g., buying federal agency debt securities and mortgage-backed securities).<ref>Wolf, Martin. (16 December 2008) [https://www.ft.com/content/d049482c-cb8f-11dd-ba02-000077b07658 "'Helicopter Ben' confronts the challenge of a lifetime"]. ''Financial Times''.</ref><ref>[http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm Remarks by Governor Ben S. Bernanke]. The Federal Reserve Board.</ref>
According to economist Robert McTeer, former president of the Federal Reserve Bank of Dallas, there is nothing wrong with printing money during a recession, and quantitative easing is different from traditional monetary policy "only in its magnitude and pre-announcement of amount and timing".<ref name="McTeer"/><ref name="blogs.forbes.com"/>
=== Effects on stock market prices === The effects of quantitative easing on the stock market are always present. The stock market reacts to nearly all updates regarding the Federal Reserve's actions. It tends to experience an upswing following announcements of expansionary policies and a downturn following announcements of contractionary policies.<ref>{{Cite journal |last1=Mishra |first1=Ajay Kumar |last2=Parikh |first2=Bhavik |last3=Spahr |first3=Ronald W. |date=November 2020 |title=Stock market liquidity, funding liquidity, financial crises and quantitative easing |url=https://doi.org/10.1016/j.iref.2020.08.013 |journal=International Review of Economics & Finance |volume=70 |pages=456–478 |doi=10.1016/j.iref.2020.08.013 |issn=1059-0560|url-access=subscription}}</ref> Although there is no certain outcome, available evidence points to a positive correlation between quantitative easing policies and upward trends in the stock market.<ref>{{Cite journal |last1=Hudepohl |first1=Tom |last2=van Lamoen |first2=Ryan |last3=de Vette |first3=Nander |date=November 2021 |title=Quantitative easing and exuberance in stock markets: Evidence from the euro area |url=https://doi.org/10.1016/j.jimonfin.2021.102471 |journal=Journal of International Money and Finance |volume=118 |article-number=102471 |doi=10.1016/j.jimonfin.2021.102471 |issn=0261-5606}}</ref> Some of the most significant increases in the US stock market indices have coincided with the implementation of quantitative easing measures. The most recent example would be the Federal Reserve's policies during the COVID-19 pandemic. The urgent need to stimulate the economy required a large influx of new liquidity, which has been achieved by quantitative easing. This liquidity was lent by banks to enterprises, stimulating their expansion and inflating sales, which led investors to anticipate growth in company revenues, leading to increased stock purchases.<ref>{{Cite journal |last1=Fatouh |first1=Mahmoud |last2=Giansante |first2=Simone |last3=Ongena |first3=Steven |date=December 2021 |title=Economic support during the COVID crisis. Quantitative easing and lending support schemes in the UK |url=https://doi.org/10.1016/j.econlet.2021.110138 |journal=Economics Letters |volume=209 |article-number=110138 |doi=10.1016/j.econlet.2021.110138 |issn=0165-1765}}</ref>
Conversely, the post COVID-19 economy, which faced increased inflation due to excessive quantitative easing, has been addressed through quantitative tightening measures. During this period, stocks experienced a downward shift. Investors thus favor the idea of increasing asset values during initial inflationary periods. However, it is more probable that confidence grows due to the anticipation of a healthier economy following expansionary measures and decreases when opposite measures are put in place.<ref>Dobbs, R., Koller, T., & Lund, S. (2014, Winter). [https://www.mckinsey.com/client_service/corporate_finance/latest_thinking/mckinsey_on_finance/~/media/5966C71286604E2DA0A2630B224E7F79.ashx What effect has quantitative easing had on your share price?]. McKinsey & Company.</ref>
==Alternative policies==
=== Drawbacks of QE === Despite being a hallmark of unconventional monetary policy, QE is not without its drawbacks. Areas of controversy around QE are that it can inflate asset prices, magnify inequality, and complicate central bank exit strategies.<ref>{{Cite journal |last=Faure |first=Alexander Pierre |date=2013 |title=Money Creation: Misconceptions: Quantitative Easing Creates Money |url=https://doi.org/10.2139/ssrn.2254953 |journal=SSRN Electronic Journal |doi=10.2139/ssrn.2254953 |issn=1556-5068}}</ref><ref name="EconJour-Joyce" /> As a result, policymakers and scholars continually research alternative methods that central banks can use to stimulate the economy and/or control inflation, especially in times when the conventional monetary policy methods are less effective.<ref>{{Cite journal |last1=Ascari |first1=Guido |last2=Sbordone |first2=Argia M. |date=September 2014 |title=The Macroeconomics of Trend Inflation |url=https://www.aeaweb.org/articles?id=10.1257/jel.52.3.679 |journal=Journal of Economic Literature |language=en |volume=52 |issue=3 |pages=679–739 |doi=10.1257/jel.52.3.679 |issn=0022-0515}}</ref>
=== Negative Interest Rate Policy === The aim of this policy is to stimulate economic activity when conventional rate cuts have reached their limit. This is done by central banks, who set nominal policy rates below zero. These central banks charge commercial banks for holding excess reserves. This has the goal of incentivizing banks to lend rather than hoard cash through a carrot, rather than a stick, approach.<ref>{{Cite journal |last=Kimball |first=Miles S. |date=November 2015 |title=Negative Interest Rate Policy as Conventional Monetary Policy |url=https://doi.org/10.1177/002795011523400102 |journal=National Institute Economic Review |volume=234 |pages=R5–R14 |doi=10.1177/002795011523400102 |issn=0027-9501}}</ref>
This method is designed to lower short- and long-term interest rates and weaken the domestic currency, thereby supporting exports.<ref>{{Cite journal |last=Bassetto |first=Marco |date=2004-04-01 |title=Negative Nominal Interest Rates |url=https://doi.org/10.1257/0002828041302064 |journal=American Economic Review |volume=94 |issue=2 |pages=104–108 |doi=10.1257/0002828041302064 |issn=0002-8282}}</ref> This policy has helped countries like Japan stabilize its economy, but it does have limitations and structural challenges that did not assist Japan in its long-term issues like an aging population.<ref>{{Cite web |title=Japan ends era of negative interest rates. Here's why |url=https://www.weforum.org/stories/2024/03/japan-ends-negative-interest-rates-economy-monetary-policy/ |archive-url=https://web.archive.org/web/20251010072051/https://www.weforum.org/stories/2024/03/japan-ends-negative-interest-rates-economy-monetary-policy/ |archive-date=10 October 2025 |access-date=2025-11-19 |website=World Economic Forum |language=en |url-status=live}}</ref>
=== QE for the people === {{See also|Helicopter money}} In response to concerns that QE is failing to create sufficient demand, particularly in the Eurozone, some have called for "QE for the people" or what Milton Friedman called "helicopter money". Instead of buying government bonds or other securities by creating bank reserves, central banks could make payments directly to households.<ref>{{cite news| url=http://blogs.reuters.com/anatole-kaletsky/2012/08/01/how-about-quantitative-easing-for-the-people/ | archive-url=https://web.archive.org/web/20120803020125/http://blogs.reuters.com/anatole-kaletsky/2012/08/01/how-about-quantitative-easing-for-the-people/ | url-status=dead | archive-date=3 August 2012 |work=Reuters | title=How about quantitative easing for the people? | date=1 August 2012}}</ref>
Economists Mark Blyth and Eric Lonergan argue in ''Foreign Affairs'' that this is the most effective solution for the Eurozone, particularly given the restrictions on fiscal policy.<ref>{{cite news| url=http://www.foreignaffairs.com/articles/141847/mark-blyth-and-eric-lonergan/print-less-but-transfer-more |work=Foreign Affairs | title=Print Less but Transfer More | date=September–October 2014}}</ref> They argue that based on the evidence from tax rebates in the United States, less than 5% of GDP transferred by the ECB to the household sector in the Eurozone would suffice to generate a recovery, a fraction of what it intends to be done under standard QE. Oxford economist John Muellbauer has suggested that this could be legally implemented using the electoral register.<ref>{{cite news | url=http://www.voxeu.org/article/combatting-eurozone-deflation-qe-people | work=VOX | title=Combatting Eurozone deflation | date=23 December 2014}}{{Dead link|date=February 2026 |bot=InternetArchiveBot}}</ref>
On 27 March 2015, 19 economists including Steve Keen, Ann Pettifor, Robert Skidelsky, and Guy Standing signed a letter to the ''Financial Times'' calling on the European Central Bank to adopt a more direct approach to its quantitative easing plan announced earlier in February.<ref>{{cite news|url=http://www.ft.com/intl/cms/s/0/7bc99348-d40b-11e4-99bd-00144feab7de.html#axzz3Va5I8EHR|title=Better ways to boost eurozone economy and employment|work=Financial Times|date=26 March 2015}}</ref> In August 2019, prominent central bankers Stanley Fischer and Philip Hildebrand co-authored a paper published by BlackRock in which they propose a form of helicopter money.<ref>Stanley Fischer, Elga Bartsch, Jean Boivin, Stanley Fischer, Philipp Hildebrand (August 2019). "Dealing with the next downturn: From unconventional monetary policy to unprecedented policy coordination" (PDF). ''BlackRock Institute''.</ref>
=== Carbon quantitative easing === Carbon quantitative easing (CQE) is an internationally coordinated monetary policy that forms a key part of a proposed climate policy, called a global carbon reward or carbon reward.<ref>{{Cite journal |last1=Chen |first1=Delton B. |last2=van der Beek |first2=Joel |last3=Cloud |first3=Jonathan |date=2017-07-03 |title=Climate mitigation policy as a system solution: addressing the risk cost of carbon |url=https://www.tandfonline.com/doi/full/10.1080/20430795.2017.1314814 |journal=Journal of Sustainable Finance & Investment |volume=7 |issue=3 |pages=233–274 |doi=10.1080/20430795.2017.1314814 |issn=2043-0795 |s2cid=157277979 |url-access=subscription}}</ref><ref name="Chen Carbon Reward paper">{{cite web|last=Chen |first=Delton B. |year=2025 |title=Carbon Reward Policy: An Economic Framework for Responding to Climate Damages & Systemic Risks. |series=Economics & Policy Working Paper No. 1 |url=https://zenodo.org/records/17341212 |doi=10.5281/zenodo.17294364}}</ref><ref>{{Cite book |last1=Chen |first1=Delton B. |last2=van der Beek |first2=Joel |last3=Cloud |first3=Jonathan |editor2-last=Flamos |editor2-first=Alexandros |editor3-last=Lieu |editor3-first=Jenny |chapter=Hypothesis for a Risk Cost of Carbon: Revising the Externalities and Ethics of Climate Change |date=2019 |title=Understanding Risks and Uncertainties in Energy and Climate Policy |pages=183–222 |editor1-last=Doukas |editor1-first=Haris |place=Cham |publisher=Springer International Publishing |doi=10.1007/978-3-030-03152-7_8 |isbn=978-3-030-03151-0 |s2cid=158251793 |doi-access=free}}</ref><ref>{{Cite web |last=Zappalà |first=Guglielmo |date=2018 |title=Central Banks' Role in Responding to Climate Change: Monetary Policy and Macroprudential Regulation |url=http://rgdoi.net/10.13140/RG.2.2.33035.80167 |doi=10.13140/RG.2.2.33035.80167}}</ref> CQE would be implemented by a central bank carbon-alliance, and it is designed to direct central banks to purchase a carbon-linked financial asset, also called a carbon reward (XCR), using new bank reserves. Central banks would buy the XCR when necessary to guarantee its price floor, and to ensure its attractiveness to private investors. Unlike conventional quantitative easing, CQE would be strategic and long-term, and it does not involve buying government or corporate bonds or any other asset besides the XCR. CQE is a crucial component of the carbon reward policy because it would attract private capital and would share the mitigation cost between private investors (private sector) and central banks (public sector). With CQE, the central bank alliance would essentially be acting as the 'buyers of last resort' in the XCR market. Potential benefits of the approach are reduced costs for governments, firms, and citizens, and enhanced cooperation.<ref name="Chen Carbon Reward paper" />
=== Fiscal policy === Keynesian economics became popular after the Great Depression. The idea is that in an economy with low inflation and high unemployment (especially technological unemployment), demand side economics will stimulate consumer spending, which increases business profits, which increases investment. Keynesians promote methods like public works, infrastructure redevelopment, and increases in the social safety net to increase demand and inflation.<ref>{{Cite journal |last1=Ascari |first1=Guido |last2=Sbordone |first2=Argia M. |date=2014 |title=The Macroeconomics of Trend Inflation |url=https://www.jstor.org/stable/24434108 |journal=Journal of Economic Literature |volume=52 |issue=3 |pages=679–739 |doi=10.1257/jel.52.3.679 |jstor=24434108 |issn=0022-0515}}</ref><ref>{{Cite journal |last=Bach |first=G. L. |date=1974 |title=Inflation: Who Gains and Who Loses? |url=https://www.jstor.org/stable/40719214 |journal=Challenge |volume=17 |issue=3 |pages=48–55 |doi=10.1080/05775132.1974.11470056 |jstor=40719214 |issn=0577-5132}}</ref>
=== Monetary financing === {{Main|Monetary financing}}
Quantitative easing has been nicknamed "money printing" by some members of the media,<ref name="bbc.co.uk">[https://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/02/obtaining_the_right_to_print_m.html Stephanomics: Is quantitative easing really just printing money?]. BBC.</ref><ref>Mackintosh, James. (2 December 2010) [https://www.ft.com/content/737c1928-fe53-11df-abac-00144feab49a QE: Replacement not debasement]. ''Financial Times''.</ref><ref>Hyde, Deborah. (8 November 2010) [http://citywire.co.uk/money/ask-citywire-quantitative-easing-part-ii/a447558 Ask Citywire: Quantitative easing part II]. ''Citywire''.</ref> central bankers,<ref>{{cite speech|first=James|last=Bullard|title=Exit Strategies for the Federal Reserve|location=Global Interdependence Center, Philadelphia, Pennsylvania, United States|date=30 June 2009|url=https://www.stlouisfed.org/~/media/Files/PDFs/Bullard/remarks/PhiladelphiaGIC28june2009FINAL653pm.pdf?la=en|access-date=26 June 2011}}</ref> and financial analysts.<ref>{{cite news|date=5 March 2009|title=Bank of England to create new money: a Q&A |work=TThe Daily Telegraph |url=https://www.telegraph.co.uk/finance/recession/4941631/Bank-of-England-to-creating-new-money-a-QandA.html}}</ref><ref name="business.timesonline.co.uk">{{cite news|last=Duncan|first=Gary|date=5 March 2009|title=Bank should start printing money says Times MPC|work=The Times |url=http://business.timesonline.co.uk/tol/business/economics/the_times_mpc/article5847958.ece|archive-url=https://web.archive.org/web/20110514202851/http://business.timesonline.co.uk/tol/business/economics/the_times_mpc/article5847958.ece|url-status=dead|archive-date=14 May 2011}}</ref>
However, QE is a very different form of money creation than it is commonly understood when talking about "money printing" (otherwise called monetary financing or debt monetization). Indeed, with QE the newly created money is usually used to buy financial assets beyond just government bonds<ref name="bbc.co.uk" /> (corporate bonds etc.) and QE is usually implemented in the secondary market. In most developed nations (e.g., the United Kingdom, the United States, Japan, and the Eurozone), central banks are prohibited from buying government debt directly from the government and must instead buy it from the secondary market.<ref name="research.stlouisfed.org" /><ref>[https://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/02/ Stephanomics]. BBC.</ref> This two-step process, where the government sells bonds to private entities that in turn sell them to the central bank, has been called "monetizing the debt" by many analysts.<ref name="research.stlouisfed.org" />
The distinguishing characteristic between QE and debt monetization is that with the former, the central bank creates money to stimulate the economy, not to finance government spending (although an indirect effect of QE is to lower rates on sovereign bonds). Also, the central bank has the stated intention of reversing the QE when the economy has recovered (by selling the government bonds and other financial assets back into the market).<ref name="bbc.co.uk" /> The only effective way to determine whether a central bank has monetized debt is to compare its performance relative to its stated objectives. Many central banks have adopted an inflation target. It is likely that a central bank is monetizing the debt if it continues to buy government debt when inflation is above target and if the government has problems with debt financing.<ref name="research.stlouisfed.org">http://research.stlouisfed.org/publications/es/10/ES1014.pdf Federal Reserve Bank of St. Louis. As of 2026-04-11, exact document title unknown, link dead. Presumably one of Fed's [https://fraser.stlouisfed.org/title/economic-synopses-6715 Economic Synopses].</ref>
Some economists such as Adair Turner have argued that outright monetary financing would be more effective than QE.<ref>{{Cite web|last1=Reichlin|first1=Lucrezia|last2=Turner|first2=Adair|last3=Woodford|first3=Michael |date=2019-09-23|title=Helicopter money as a policy option|url=https://voxeu.org/article/helicopter-money-policy-option|access-date=2021-03-30|website=VoxEU.org}}</ref><ref>{{cite web|url=https://www.imf.org/external/np/res/seminars/2015/arc/pdf/adair.pdf|title=The Case for Monetary Finance – An Essentially Political Issue|format=Conference paper|author=Adair Turner|year=2015|website=IMF|access-date=30 June 2023}}</ref>
=== Neo-Fisherism === Neo-Fisherism, based on theories made by Irving Fisher, reasons that the solution to low inflation is not quantitative easing, but paradoxically to increase interest rates. This is due to the fact that if interest rates continue to decline, banks will lose customers and less money will be invested back into the economy.
In a situation of low inflation and high debt, customers will feel more secure holding on to cash or converting cash into commodities, which fails to stimulate economic growth. If the money supply increases from quantitative easing, customers will subsequently default in the face of higher prices, thus resetting the low inflation and worsening the low inflation issue.<ref>{{Cite web|url=https://ritholtz.com/2016/07/neo-fisherism-radical-idea-obvious-solution-low-inflation-problem/|title=Neo-Fisherism: A Radical Idea, or the Most Obvious Solution to the Low-Inflation Problem?|date=20 July 2016}}</ref><ref>[https://www.stlouisfed.org/publications/regional-economist/july-2016/neo-fisherism-a-radical-idea-or-the-most-obvious-solution-to-the-low-inflation-problem Neo-Fisherism: A Radical Idea or the Most Obvious Solution to the Low Inflation Problem] Federal Reserve Bank of St. Louis</ref>
== See also == * Quantitative tightening * Yield curve control
== References == {{Reflist}}
== External links == {{Wiktionary}} * [https://web.archive.org/web/20110401224143/http://www.clevelandfed.org/research/data/credit_easing/index.cfm Credit Easing Policy Tools] Interactive chart of the assets on Federal Reserve's balance sheet. * [http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm Deflation: Making Sure "It" Doesn't Happen Here], 2002 speech by Ben Bernanke on deflation and the utility of quantitative easing * [https://web.archive.org/web/20090316193610/http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm Bank of England – Quantitative Easing] * [https://web.archive.org/web/20101030003754/http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf Bank of England – QE Explained Pamphlet] * [https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf Money creation in the modern economy], Bank of England document explaining how money is created and destroyed * [http://www.federalreserve.gov/newsevents/speech/duke20090616a.htm Containing the Crisis and Promoting Economic Recovery], a Fed governor discusses quantitative easing, among other topics
{{Great Recession|state=collapsed}} {{Portal bar|Business and economics}} {{Central banks}} {{Authority control}}
{{DEFAULTSORT:Quantitative Easing}} Category:Operations of central banks Category:Financial markets Category:Inflation Category:Monetary policy Category:Bond market Category:Banking crises Category:Banking controversies