What is quantitative easing?

Quantitative easing is an unconventional monetary policy tool whereby central banks purchase government and corporate bonds, increasing the supply of money in an economy, which in a large enough quantity will raise inflation and stimulate economic activity. QE has been used when other policies are not effective or sufficient, and in times of an unprecedented global pandemic the US, UK, and EU, and a growing number of emergent economies have all put QE packages in place. The pandemic poses formidable challenges to the strongest economies and policymakers, and all economies should be open to trying new monetary tools to deal with the crisis, as traditional policies of fiscal austerity and exchange rate depreciation may not be suited. As long as such stimulus packages are used to target sustainable and growth sectors of these economies, QE should not raise additional negative impacts and should help economies foster the innovation that will secure growth in the long term.

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