quantitative easing



  • As introduced by the bank of Japan during the 1990s, this meant expanding the money supply by open market operations after the nominal interest rate was zero. Since the interest rate could fall no further, the intent was that the quantity of money would directly stimulate aggregate demand.
  • As introduced in response to the financial and economic crisis of 2008, it referred not just to expanding the money supply, but to doing it by central bank purchases of assets other than short-term government securities, such as mortgage backed securities. The purpose was to provide credit more directly to parts of the economy that needed it.


  • An alternative process for boosting the supply of money often involving the purchase of government securities that is usually employed by a central bank when its benchmark interest rates are already very low. Quantitative easing has been used by the BOJ, the Fed, the BOE and the ECB to help avoid a reduction in the amount of credit available to individuals and businesses.