Recently, the European Central Bank (ECB) announced that it would introduce a big programme of quantitative easing. Which among the following comprise quantitative
1. Cutting Interest Rates
2. Pumping Money in the economy directly
3. Issuing Bonds in the market
Select the correct option from the codes given below:
Quantitative Easing refers to creation of money to buy financial assets including sovereign bonds. Central banks usually stimulate a slowing economy by cutting interest rates, which encourage people to spend by borrowing more or discouraging them to save. But with interest rates in the developed world already close to zero, that option is no longer available. In such situations , the central banks resort to pumping money directly into the economy, a process known as quantitative easing. It is done by buying bonds from banks and financial institutions. QE was first used by the Bank of Japan in the early part of the 2000s; the Federal Reserve and the Bank of England introduced it in the wake of the financial crisis of 2008.
This question is a part of GKToday's Integrated IAS General Studies Module