Examples Of Quantitative Easing

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INTRODUCTION Since the Financial Crisis of 2008, the inflation levels in the Eurozone has been very low, with some countries even experiencing deflation. Deflation is a bad thing for economic growth, as it is indicative of low demand and underlying weakness in production. Companies lay off workers and unemployment rises preventing an economic recovery from taking place quickly. As expectations that low prices will stay persistent, people choose to hold on to money rather than spend it as its perceived value will be greater in the future. Credit and liquidity subsequently dry up and the situation descends deeper into recession or depression. This is known as a deflationary spiral. The Central bank (ECB) tried to keep deflation in check by lowering interest rates. The low interest rates would reduce commercial banks' funding costs and encourage them to make more loans, keeping the economy from falling into recession. But despite cutting interest rates as far as it could go, to almost 0% failed to spark economic recovery, the central bank had to experiment with other tools. One of them was Quantitative Easing.…show more content…
This process aims to directly increase private sector spending in the economy and return inflation to
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