All The Cool Kids Are Doing It

By Derek Hunter

Early in the financial crisis the Federal Reserve and Bank of Japan initiated a policy of quantitative easing (QE), which is an extraordinary form of monetary policy where a central bank purchases certain securities to infuse capital into the financial system. By essentially printing money, a central bank hopes to stem any deflationary risk, incentivize lending, and stimulate the economy. The European Central Bank is finally hopping on the QE bandwagon as the Eurozone risks falling into another recession. As The Economist explains, unlike in the centrally controlled U.S. and Japanese economies, the Eurozone federation will face unique economic and political challenges in implementing QE across several different countries.