Turn on thread page Beta

Layman Explanantion of Quantitative Easing watch

    • Thread Starter

    'Quantitative Easing refers to the central bank literally creating money out of thin air to stimulate the economy.
    The Central bank will print money which in turn it will use to buy government bonds. These bonds are like ‘IOU’ notes which the government promises to pay back including interest. This increases the amount of debt of the country this policy is being implemented in.
    The government will now use this new created money to help ease the pressure on banks by lending money to help them or by nationalising parts of them which in turn allows the banks to continue lending. This will hopefully increase spending in the economy.'

    Is this an accurate explanation of quantitative easing in layman terms?

    Sounds about right, I think, except there probably won't be any actual physical printing of money - it would just be numbers appearing in a computer.
Submit reply
Turn on thread page Beta
Updated: March 22, 2009

University open days

  • University of Lincoln
    Brayford Campus Undergraduate
    Wed, 12 Dec '18
  • Bournemouth University
    Midwifery Open Day at Portsmouth Campus Undergraduate
    Wed, 12 Dec '18
  • Buckinghamshire New University
    All undergraduate Undergraduate
    Wed, 12 Dec '18
Do you like exams?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.