The Bank of England or the Federal Reserve in the US, creates money by effectively issuing itself money, electronic money. The Central Bank then uses this money to buy what a bank calls assets i.e.debt in the market. In 2009, when the Bank of England carried out over £200 billion worth of QE, the BoE bought almost entirely Government securities i.e. debt of the Uk Government.
In this scenario there is one benefit and only one……. Continue reading “Quantatitive Easing made easy – it’s about avoiding sovereign default”