Quantitative easing : its nature, distinctive features and economic and financial implications

The thesis is dedicated to a detailed research of the phenomenon of quantitative easing. It analyzes the basics of conventional and unconventional monetary policies, explores the origins of quantitative easing, identifies its components, investigates their nature, and defines the circumstances under which QE is usually implemented. The dissertation explores the specifics of launching this strategy by the Bank of Japan, the Federal Reserve System, and the European Central Bank. It investigates the reasons behind large asset purchases by central banks, describes their specifics and scales, and emphasizes on the unique features inherent for the specific cases of each bank. Furthermore, it also illustrates the historical development of QE that implies transforming from a simple expansion of the central banks balance sheet into the new forms that also aim to influence the disturbed markets. In the final part, the thesis focuses on the effectiveness of exit strategies taken by the central banks under investigation and explores the critical aspects related to the prospects regarding the quantitative easings applicability in the future. Considering the controversies concerning the definition of QE, it is important to point out that this study operates with the understanding of this phenomenon that was put forward by the Bank of England. In accordance with this approach, unconventional monetary policies can be divided into “conventional unconventional” and “unconventional unconventional” tools. Quantitative easing in its “conventional unconventional” form is employed to inject additional liquidity in the markets. In turn, credit easing, which can be understood as “unconventional unconventional” instrument, is not accompanied by the expansion of the central banks balance sheets. This factorwas selected as the main criterion for distinguishing between quantitative easing and other unconventional monetary policies in this thesis.von Nelly BrizaUniversität Innsbruck, Diplomarbeit, 2018(VLID)248052