Respuesta :
After 2008, the reasoning for the fed to undertake quantitative easing was because Quantitative easing creates new bank reserves, providing banks with more liquidity and inspiring lending and investment.
Quantitative easing is a type of monetary policy within which a financial institution, like the U.S. Federal Reserve System, purchases securities from the open market to cut back interest rates and increase the cash supply.
Quantitative easing is commonly applied when interest rates float near zero and economic growth is blocked. Central banks have limited tools, like reduction of rate of interest , to effect economic process. Without the flexibility to lower rates further, central banks must strategically increase the availability of cash.
To carry out quantitative easing, central banks buy government bonds and other securities, inoculating bank reserves into the economy. Increasing the provision of cash lowers interest rates further and provides liquidity to the banking industry, allowing banks to lend with easier terms.
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