Placeholder Image

Subtitles section Play video

  • Welcome to the Investors Trading Academy talking glossary of financial terms and events.

  • Our word of the day isQuantitative EasingQuantitative easing also known as QE is an

  • unconventional form of monetary policy where a Central Bank creates new money electronically

  • to buy financial assets, like government bonds. This process aims to directly increase private

  • sector spending in the economy and return inflation to target.

  • One of the main tools they have to control growth is raising or lowering interest rates.

  • Lower interest rates encourage people or companies to spend money, rather than save.

  • But when interest rates are almost at zero, central banks need to adopt different tactics

  • - such as pumping money directly into the economy.

  • This process is known as quantitative easing or QE.

  • The central bank buys assets, usually government bonds, with money it has "printed" - or created

  • electronically these days. It then uses this money to buy bonds from

  • investors such as banks or pension funds using this "new" money, which increases the amount

  • of cash in the financial system, encouraging financial institutions to lend more to businesses

  • and individuals. This in turn should allow them to invest and spend more, hopefully increasing

  • growth.

Welcome to the Investors Trading Academy talking glossary of financial terms and events.

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

A2 US easing quantitative financial central bank central interest

What is an Quantitative Easing?

  • 241 20
    James posted on 2015/06/18
Video vocabulary