ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Unconventional Monetary Policy in Japan and the United State

New Perception and Different Learnings?

When most of the advanced countries are on the recourse to exit the path of unconventional monetary policy, it is time to look at a new perspective and review the unconventional monetary policy from the lens of tool purchase by central banks under quantitative easing. The purchase of government treasuries affects risk premia and yields more compared to the purchase of private assets by central banks. But the purchase of private exchange traded funds/mortgage backed securities are important for cash-starved entrepreneurs and real-estate developers compared to government bond purchase. How India was different in practising the unconventional monetary policy is also discussed.

Figure 1 referred in the text is available online.

The unconventional monetary policies have been in use to give stimulus to the economies of the advanced countries because the conventional measures of monetary policies ceased to be effective or large fiscal stimulus led to questions of unsustainability of the debt. Post the financial crisis of 2007–08, the Federal Reserve System introduced the large-scale asset purchase programme, Bank of Japan undertook comprehensive monetary easingfrom October 2010, Bank of England introduced asset purchase programme since March 2009 and European Central Bank undertook long-term refinancing operations since May 2009—all measures were part of unconventional monetary policy or popularly known as quantitative easing (QE), mentioned in Table 1.

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Updated On : 27th Jul, 2023
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