Quantitative easing

Quantitative easing, and monetary easing english quantitative easing, monetary policy is a central bank that is used when the interest rate the central bank has already been set to zero or near zero and continue an expansionary monetary policy is announced. In this case, the central bank buys bonds, private or government bonds in order to continue to supply the economy and the respective State with more money. As a result, the balance sheet totals to take ( assets / liabilities ) of the central banks. The aim of quantitative easing is to increase the reserves in the balance sheets of commercial banks. Among them money creation (or creation of central bank money) is understood. It is commonly so that an increase in inflation and a threat to financial stability due to the formation of speculative bubbles on stock, bond and commodity markets assumed (in fact is essential to observe the total height of sectoral net borrowing in relation to the savings rate ). For example, despite the central bank is funded national debt of Japan economy on the brink of deflation and has since years in all OECD countries, the highest public debt ratio. This is explained with a ruling in Japan balance sheet recession.

The International Monetary Fund is different besides conventional monetary policy measures "Liquidity easing", " credit easing" and " quantitative easing ". The central banks of the United States, Britain, Japan and some emerging countries operate accordingly quantitative easing, which the IMF is defined as the direct purchase of government securities or government guaranteed securities. The European Central Bank put under existing money market instruments at a fixed interest rate set unlimited liquidity available and also has the eligibility extended to a wider range of securities. As part of the liquidity easing of the ECB has been provided up to 250 billion euros on currency swaps U.S. dollar by the Federal Reserve from September 2008 to September 2009. Other central banks will provide direct foreign currencies. As part of the credit easing would immediately bought up by private securities or those granted directly credit. Here lists the IMF, the Federal Reserve, the Bank of England and the Bank of Japan.

Application Examples

2001

Was applied for the first time quantitative easing by the Japanese central bank in March 2001.

2007

In the wake of the financial crisis that began in 2007, the U.S. central bank has now lowered the benchmark interest rate at zero to 0.25 percent, so now quantitative easing would have to be used, monetary policy should be eased further.

2009

In a speech on 13 January 2009, however, denies the chairman of the U.S. Federal Reserve Ben Bernanke to pursue quantitative easing, the central bank policy is rather " credit easing". Contrary to these statements, the U.S. central bank decided on 18 March 2009 to purchase 2010 government bonds and other securities with a total value of more than a trillion dollars by the end of March.

Since 6 March 2009, the Bank of England operates quantitative easing. In a first step 75 billion pounds have been pumped into the market, is also about buying medium-and long -term government bonds. On 5 November 2009 an expansion of the program to the interest held by the bank amounting to 200 billion pounds was decided.

The Swiss National Bank announced on 12 March 2009 to buy up foreign currencies and bonds. It has not been announced, the extent to which the intervention operates.

On 8 May 2009, ECB President Jean -Claude Trichet said that the European Central Bank holdings no quantitative easing, but something that one could describe as " credit easing ". Also since May 10, 2010 made ​​by the ECB purchases of government and private bonds not subject to the quantitative easing because the purchases are sterilized to avoid any impact on monetary growth.

2010

A new program for the purchase of government bonds, known as " Quantitative Easing II " ( " QE2 " ) called, was initiated by the Federal Open Market Committee of the Fed on 3 November 2010 and lasted until the end of June 2011.

2011

On 22 September 2011, the Fed announced a new version of "Operation Twist", which has already been applied once in 1961. Under this program, the Fed plans to sell U.S. government bonds with a maturity of less than three years in the amount of up to 400 billion U.S. dollars. The same time, 400 billion U.S. dollars will be reinvested in long -term U.S. government bonds. The Fed wants to reach thereby lowering long-term rates, which loans are tend to be cheaper.

On October 6, 2011, the Bank of England announced an expansion of the program of quantitative easing. The volume of purchased assets increased from the previous 200 billion pounds to 275 billion pounds. With the additional 75 billion pounds of mainly British government bonds should be purchased within the next four months.

2012

On February 9, 2012, the Bank of England a renewed expansion of government bond purchases by 50 billion pounds to 325 billion pounds decided.

In September 2012, the Fed began a new purchase program, which is called QE3, even QE III.

As QE8 an eighth round of quantitative easing in Japan is called.

Alternatives

The alternative concept of free economy installed a circulation safeguard to allow the existence of negative interest rates. In a free market economic system, the money supply can thus also in a central bank interest rate near zero flare by interest rate cut, so that a policy of quantitative easing can be avoided. In the wake of the global financial crisis, these ideas are increasingly discussed again in the art.