Quantitative Easing

A form of unconventional monetary policy, Quantitative Easing is an expansion of the open market operation of a country’s central bank. It is the purchase of longer-term securities, as well as other types of assets, such as mortgage-backed securities from the open market in order to increase the money supply, while encouraging lending and investment. Through this, money is added to the economy, and upped fixed income securities with lower interest rates. Quantitative easing increases the money supply by purchasing assets with newly-created bank reserves in order to provide banks with more liquidity.