What is quantitative easing?
QE is an emergency tool of monetary policy that the Bank of England can use to boost the UK economy. Cutting interest rates is the principal way the Bank can fire up economic activity but rates have been cut as low as they can go.
How does it work?
The Bank generates fresh amounts of electronic money to encourage lending to businesses. Specifically, the Bank buys assets like Government and corporate bonds with its new cash. The companies selling those assets - usually commercial banks or other financial businesses such as insurance companies - will then have new money in their accounts, which in turn should feed into the wider economy.
So it's not really 'printing money'?
Not in the literal sense, no. And not in the sense that money was printed in Weimar Germany or more recently in Zimbabwe. That money was used to fund massive government deficits and led directly to hyperinflation. This is outlawed under the Maastricht Treaty.
Read more:
http://www.thisismone...rk.html#ixzz1aMGCPXWj