Quantitative easing or QE (COP)
COP – this monetary policy, which is different from those of monetary policy, as it is unconventional. His use of this monetary policy has in stimulating the central bank of the country’s economy when conventional monetary policy under the influence of various kinds of factors are ineffective or not enough effective.
When you start a program of quantitative easing, the central bank buys assets to make any additional number of funds in the economy of the country.
Monetary policy, designed to stimulate the economy, usually expressed in the country’s central bank buying of short-term government assets, which would reduce the short-term market interest rates by working together, and credit operations carried out on the open market.
But if short-term interest rate is near zero,
a common monetary policy can not reduce them even further. AT
this situation, the financial authorities of the country to apply quantitative
easing to stimulate the economy to continue using the method
repayment of long-term assets, not only short-term. Through
this, the regulator lowers long-term interest rates.
In addition, quantitative easing can be used also for
curb inflation, not allowing it to fall below the target level. Here
monetary policy can be more effective than politics
Retention deflation or little effective when the stop
granting of loans by banks.
According to the International Monetary Fund, since, in 2008
year, the financial crisis, monetary policy regulators
applying QE entailed reduction
systemic risk, after the Lehman Brothers pleaded
bankrupt. In addition, according to the IMF, the policy of quantitative easing
It contributed to the growth of confidence in the market and reduce the risk of a recession in the
countries of the Group of Seven.
Quantitative easing could trigger a surge in inflation when the dimensions used to mitigate will be revalued and
vkinuto economy will be more and more money than
On the other hand, the monetary policy can lead to
the deterioration of the economic situation in the event that the banks will show
issuing reluctance households and small business loans, order
increase demand. The introduction of quantitative easing in monetary
policy contributes to a rather effective mitigation process
deleveraging and consequently reduces debt yields.
But it is worth noting that the low interest rates in the global
economy, can provoke the appearance of bubbles in the stock economies
The growth of the money supply inflation gives a response that is both
generally manifested with some delay. Inflation risks are
decline in case economic growth will be higher than the increase
money supply, caused by quantitative easing. If the connection
with an increase in the money supply will increase production, then
the performance of the monetary unit can also be increased, in spite of
that the economy will be more money.
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