Quantitative Easing, QE
Updated 2026-08-05
INTRODUCTION
English translation pending.
CORE DEFINITION
Quantitative easing is the purchase of long-term assets, typically government bonds, by a central bank using newly created reserves. It is deployed when the policy rate has reached its effective lower bound and conventional rate cuts are no longer available. The purchases raise asset prices and lower long-term yields, easing credit conditions through channels other than the short rate. It works through interest rates and credit conditions rather than as a direct cash transfer to the public.
SCAFFOLDING EFFECT
Reduce cognitive load
- Buy to support: when confidence collapses, put real capital behind the assets rather than issuing statements. - Track the balance sheet: follow the central bank's holdings as a signal of policy stance. - Read the channel: remember the effect runs through asset prices and credit, not through cash handouts.
Anchor fast decisions
Purchasing long-term securities removes duration from the market and adds reserves to the banking system, which bids up bond prices and pushes long-term yields down. Lower long-term rates reduce borrowing costs for firms and households, supporting investment and asset valuations. Because the transmission runs through prices rather than through direct spending, the effect depends on how much credit demand responds.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E9%87%8F%E5%8C%96%E5%AF%AC%E9%AC%86verified
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