Quantitative easing is a kind of monetary policy, which mainly refers to the practice of central banks buying government bonds and bank financial assets through the open market.

Quantitative easing is a kind of monetary policy, which mainly refers to the intervention of the central bank to increase the supply of base money and inject a lot of liquidity into the market by buying medium and long-term bonds such as treasury bonds after implementing the policy of zero interest rate or near zero interest rate, and is also simply described as indirect printing money.

Quantitative easing directly leads to an increase in the money supply in the market. The improvement of market liquidity can reduce interest, and the low interest environment provides a superior financing environment for the development of the real economy. Therefore, after the financial crisis broke out in the United States in 2008, the Federal Reserve launched several rounds of quantitative easing policies to stimulate economic development.

The development of history

Quantitative easing is a relatively young economic vocabulary, which was first put forward by the Bank of Japan in 200 1 from 200 1 to 2006.

In order to cope with the continuous decline of domestic economy and investment recession, the Bank of Japan continuously purchased a large number of public bonds and long-term bonds at extremely low interest rates, injected liquidity into the banking system, and kept the interest rate close to zero.

By injecting liquidity into the banking system, banks are forced to lend at lower loan interest rates, thus increasing the money supply of the entire economic system and promoting investment and the recovery of the national economy. This is completely different from the interest rate leverage regulation of the central bank under normal circumstances.

Under normal economic development, the central bank will fine-tune the interest rate through open market operations, generally by buying short-term securities in the market, so as to adjust the interest rate to the established target interest rate. On the other hand, quantitative easing aims at long-term low interest rates, and central banks continue to inject liquidity into the banking system and put a lot of money into the market.

That is, under quantitative easing, the monetary policy implemented by the central bank on the economy is not fine-tuning, but a fierce medicine. Many scholars in the global gold exchange believe that it was the Bank of Japan that decisively adopted the quantitative easing policy, that is, actively increased the money supply, which enabled the Japanese economy to recover in 2006.

Since then, "quantitative easing" has attracted much attention as a means for the central bank to contain the economic crisis and stimulate economic recovery.