Expansionary Monetary Policy

1. United States: U.S. Federal Reserve

  • Quantitative Easing (QE) (2008-2014)

    • Context: In response to the Great Recession.

    • Policy: Involved purchasing large quantities of government bonds and mortgage-backed securities to increase liquidity in the financial system and stimulate lending and investment.

2. Europe: European Central Bank (ECB)

  • Long-Term Refinancing Operations (LTRO) (2011-2012)

    • Context: In an effort to alleviate the European debt crisis.

    • Policy: Provided European banks with cheap long-term loans, aimed at increasing liquidity in the financial system and encouraging lending to businesses and households.

  • Negative Interest Rates (2014-Present)

    • Context: Implemented by the central banks of several European countries (including the ECB) to boost inflation and stimulate economic growth.

    • Policy: Effectively charge banks for holding reserves, incentivizing them to lend more.

3. Japan: Bank of Japan

  • Zero Interest Rate Policy (ZIRP) (1999-2006)

    • Context: In response to a prolonged period of deflation and economic stagnation.

    • Policy: Kept the policy rate at or near zero for several years, in an effort to stimulate borrowing and investment.

  • Negative Interest Rates (2014-Present)

    • Context: Implemented by the Bank of Japan in an effort to boost inflation and stimulate economic growth.

    • Policy: Effectively charges banks for holding reserves, incentivizing them to lend more.

4. China: People’s Bank of China

  • Stimulus Package (2009-2010)

    • Context: In response to the Great Recession.

    • Policy: Included a reduction in the reserve requirement ratio for banks, as well as a series of interest rate cuts, in order to stimulate lending and investment.