Bank of England Quantitative Easing - Dissertation Example

Quantitative easing is a process which the central banks often consider as a last resort to inject liquidity in an economy, without caring for its own quantity of reserve assets (Organisation for Economic Co-operation and Development 72). Often banks opt to buy off all government securities in circulation in the open market in their aggression, without preferring to fix any target rate of retaining their money reserves (Baumol & Blinder 271; Marta & Brusuelas, “Quantitative Easing”).

Such an unorthodox strategy, like quantitative easing, helped to bail out economies like Japan at a time when it was undergoing its worst phase of liquidity crunch. The method helped the nation to revive from its plight through enhancing its monetary base significantly, though meanwhile, the government had to face immense deficits in their budgets (Organisation for Economic Co-operation and Development 50). Empirical evidence also suggests a positive impact of the policy upon the economy, via an upswing in asset prices and hence economic progress (Callen & Ostry 207).

In fact, the method continues to be one that the central banks of different nations look up to as the last alternative to recoup liquidity, as is evident from the example of the UK (Kollowe, par. 2); the Bank of England injected an amount of 200 billion GBP, through the purchase of government securities, in 2009 out of its reserves (Inman, par. 1; Organisation for Economic Co-operation and Development 50). The Fed’s attempt is expected to boost up stock prices in the nation and benefit the nation eventually (Weisenthal, par. 6). The USA too in its urgency to create solvency in the nation has sought refuge to the method, post their experience of the financial recession, when the Fed announced of buy up government bonds worth $ 600 billion by the year-end (Khan, par. 3).