The Central Bank

creates electronic

money to purchase

Government bonds,

equity, and

corporate bonds.

The Central Bank creates

electronic money to purchase

Government bonds, equity, and

corporate bonds. The increase in money supply will lead to an

increase in the price of assets and incremental decrease in the interest rates due to an increase in demand for money.

Due to the decreased

interest rates, borrowing and

funding become less expensive.

Businesses prosper in hopes to stimulate the

economy.

Once the economy

is restored, the

bonds are

destroyed and

money supply is

decreased.

Risks of Quantitative Easing

• The Central Bank might lose money

• Risk of Inflation

• Consumer confidence could diminish

• Difficult to gauge the correct amount of Quantitative Easing needed to bolster an economy