Introduction

Since the advent of the financial crisis in 2008, some of the world’s largest central banks, namely the US Federal Reserve (Fed), the Bank of England (BOE), the Bank of Japan (BOJ), and the European Central Bank (ECB), among others, have embarked on monetary easing or quantitative easing. This is an unorthodox way of pumping money into the economy and aiming to lower the long-term interest rates in order to combat a recession. Since interest rates in industrial countries had declined to near zero in the aftermath of the global crisis, the scope for further monetary easing through lower policy rates became very limited. Quantitative easing (QE) and other asset purchase programs have therefore been adopted under exceptional circumstances. Japan is credited as the first country that started implementing QE in 2001. But it was not until the 2008 financial crisis that central banks of developed countries started using QE regularly to stimulate their economies, increase bank lending, and encourage spending. Refer to Tables 4.1, 4.2, 4.3, and 4.4 for a history of QE for the USA, the UK, Japan, and Europe, respectively.