Quantitative Easing process aims to directly increase private sector spending in the economy and return inflation to target. It increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. It is distinguished from standard central banking monetary policies, which are usually enacted by buying or selling government bonds on the open market to reach a desired target for the interbank interest rate. Sometimes dubbed incorrectly “printing money” a central bank simply creates new money at the stroke of a computer key, in effect increasing the credit in its own bank account.
Quantitative Easing
