WHAT IS QUANTITATIVE EASING?
one can answer to the question simply as "PRINTING MONEY". But there are a lot of concepts involved in it.
when a country goes in to an economic slump it uses this option as a last resort to bring back the economy back in to the track.
every country has certain foreign reserves,when a country's central bank decides to go for QE(quantitative easing) it takes some part of its foreign reserves,the corresponding worth of it is used to raise the country's liquidity by printing money.(but more generally it goes for open market operations to raise the liquidity than by QE, as i already mentioned QE should be the last resort). QE brings two types of inflation, one is GOOD inflation that is higher prices for equities and corporate bonds and the other in the form of BAD inflation which leads to surging commodity prices.
OPEN MARKET OPERATIONS?
R.B.I------COMMERCIAL BANKS-----PUBLIC.
it is the sale or purchase of securities by R.B.I to or from commercial banks to reduce or increase money with the public.
QE1,as operation twist- nicknamed after chubby checker's dance craze of the day dates back to 1961 when it was put in to action by then president John F Kennedy and federal reserve chief William Martin in an attempt to stop massive flow of money from US to Europe. At Jackson Hole in 2010, Ben Bernanke had set the stage for QE2 -using federal balance sheet to buy financial assets.we could see QE3 return in new form in January 2012.
QE2 had minimized the risk of deflation and positioned US for renewed growth and price stability.QE2 pushed financial investors out of risk spectrum and delivered higher asset prices.
one can answer to the question simply as "PRINTING MONEY". But there are a lot of concepts involved in it.
when a country goes in to an economic slump it uses this option as a last resort to bring back the economy back in to the track.
every country has certain foreign reserves,when a country's central bank decides to go for QE(quantitative easing) it takes some part of its foreign reserves,the corresponding worth of it is used to raise the country's liquidity by printing money.(but more generally it goes for open market operations to raise the liquidity than by QE, as i already mentioned QE should be the last resort). QE brings two types of inflation, one is GOOD inflation that is higher prices for equities and corporate bonds and the other in the form of BAD inflation which leads to surging commodity prices.
OPEN MARKET OPERATIONS?
R.B.I------COMMERCIAL BANKS-----PUBLIC.
it is the sale or purchase of securities by R.B.I to or from commercial banks to reduce or increase money with the public.
QE1,as operation twist- nicknamed after chubby checker's dance craze of the day dates back to 1961 when it was put in to action by then president John F Kennedy and federal reserve chief William Martin in an attempt to stop massive flow of money from US to Europe. At Jackson Hole in 2010, Ben Bernanke had set the stage for QE2 -using federal balance sheet to buy financial assets.we could see QE3 return in new form in January 2012.
QE2 had minimized the risk of deflation and positioned US for renewed growth and price stability.QE2 pushed financial investors out of risk spectrum and delivered higher asset prices.
