Investment Management -
What is Quantitative Easing?
Welcome to our four-part series of 'Everything you always wanted to know but never dared to ask about the exciting world of central banking'. A light-hearted story about helicopters, printing presses and money creation.
The COVID economic crisis, the role of central banks and whether helicopter money can save the day. The world’s central banks (US Federal Reserve, Bank of England, Bank of Japan and the European Central Bank) play a crucial role in the global economy. Broadly speaking, they serve as both policy maker and lender of last resort and their objective is to help keep their respective economies in balance.
Our four-part series aims to demystify the world of central banks and monetary policy. Follow us here as the story unfolds. Complete the form to subscribe and receive the next issue direct to your inbox.
Central banks monitor the economy and the financial system and pay particular attention to the speed and temperament of growth. What do they want to see? Monetary officials like when the temperature of inflation and the economy is not too cold nor not too hot, think of it like goldilocks, namely ‘just right’. But when growth begins to overheat, or a crisis hits, central bankers spring into action.
In the first issue we discussed the purpose of a central bank and the conditions around which they spring into action to interact with the economy. In this issue we look at what happens when the traditional techniques no longer work. Enter, quantitative easing (QE), one of the stars…
Welcome to issue three of our tour through the inner workings of the world’s central banks. In the first issue we discussed the purpose of a bank, in the second we spoke about what happens when conventional policy needs to go unconventional and the function of fiscal policy. In this issue we let you in, momentarily, on a little secret about how the economy really works…
In this fourth and final issue, we look at what happens when commercial banks can’t lend and/or businesses don’t want to borrow, central banks have already run out of ammunition and governments are desperate for growth. In this scenario, we reach the final frontier and are left to ask, what next?
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If you would like to discuss how QE is changing the economic landscape, and what this might mean for your investments, book a review today by completing the enquiry form below, contacting us at Banking@arbuthnotlatham.co.uk or calling +44 (0)20 7012 2500.
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