eli5 what is quantitative easing?


eli5 what is quantitative easing?

In: 1

It is a monetary policy where a central bank purchases predetermined amounts of government bonds or other financial assets in order to inject money into the economy to expand economic activity

The central bank buys loans off normal banks and gives them money in exchange. So now there is more money in the economy.

When central banks want to print money they have to figure out a relatively fair way to do it – they don’t just give free money to certain banks – one way is to buy things that are already buyable (banks trade loans with each other).