Introduction Quantitative easing (QE) is a non-conventional monetary policy tool employed by central banks to stimulate economic growth by increasing liquidity in financial markets. This policy is primarily executed through large-scale asset purchases, such as government bonds, mortgage-backed securities, and, in some cases, corporate bonds. The primary objective of QE is to lower interest rates, encourage lending, and stimulate economic activity, particularly during periods of low inflation and sluggish growth. This article explores the mechanisms of QE, its effects on economies, associated risks, and real-world applications in different financial environments. Mechanisms of Quantitative Easing QE operates through a structured process where central banks inject liquidity into the economy. This process involves several key steps: Asset Purchases: Central banks purchase financial assets, predominantly government bonds, from banks and other financial institutions. These purchases...
Comments
Post a Comment