양적완화(量的緩和, quantitative easing)

[진세]

양적완화(量的緩和, quantitative easing)는 중앙은행의 정책으로 금리 인하를 통한 경기부양 효과가 한계에 봉착했을 때 중앙은행이 국채매입 등을 통해 유동성을 시중에 직접 푸는 정책을 뜻한다. 금리중시 통화정책을 시행하는 중앙은행이 정책금리가 0%에 근접하거나, 혹은 다른 이유로 시장경제의 흐름을 정책금리로 제어할 수 없는 이른바 유동성 저하 상황하에서 유동성을 충분히 공급함으로써 중앙은행의 거래량을 확대하는 정책이다. 중앙은행은 채권이나 다른 자산을 사들임으로써, 이율을 더 낮추지 않고도 돈의 흐름을 늘이게 된다.

순기능

IMF에 따르면 2000년대 후반에 선진국에서 있었던 양적완화는 리만브라더스 파산으로 인한 구조적 위험을 감소시키고, 경기후퇴를 막음으로써 시장의 자신감을 향상시키는 데 기여했다.

위험

만일 양적완화의 필요량 예측이 과잉될 경우, 지나친 인플레이션이 초래될 수 있다. 또, 저금리가 계속될 경우 자국에는 원하는 효과가 나더라도 다른 나라에는 자산 거품을 초래할 수도 있다.

주요국 중앙은행의 양적완화정책 사례

2008년 9월 리먼 브라더스 사태 이후 글로벌 금융불안이 실물부분으로 빠르게 확산되면서 경기침체가 심화되자 주요국 중앙은행은 정책금리를 대폭 인하하였으나 효과를 보지 못하였다. 이러한 상황을 타개하기 위해 미국, 영국 중앙은행은 비전통적 통화정책 수단인 양적완화정책을 실시하게 된다. 미국 연방준비이사회는 리먼 브러더스 사태 이후 정책금리 수준 달성에 필요한 규모 이상으로 유동성을 공급함으로써 사실상 양적완화정책을 시작하였으며 2008년 12월에는 정책금리를 제로 수준으로 낮추면서 대차대조표상의 자산 부채 규모를 확대하는 정책을 상당기간 지속할 것임을 천명하였다.

Quantitative easing (QE) is an unconventional^[1][2] monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank buys financial assets to inject a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified target value. A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new electronically created money.^[3][4][5][6] This action increases the excess reserves of the banks, and also raises the prices of the financial assets bought, which lowers their yield.^[7]

Expansionary monetary policy typically involves the central bank buying short-term government bonds in order to lower short-term market interest rates (using a combination of standing lending facilities^[8][9] and open market operations).^{[10][11][12][13]} However, when short-term interest rates are either at, or close to, zero, normal monetary policy can no longer lower interest rates. Quantitative easing may then be used by the monetary authorities to further stimulate the economy by purchasing assets of longer maturity than only short term government bonds, and thereby lowering longer-term interest rates further out on the yield curve.^[14][15]

Quantitative easing can be used to help ensure inflation does not fall below target.^[6] Risks include the policy being more effective than intended in acting against deflation – leading to higher inflation,^[16] or of not being effective enough – if banks do not lend out the additional reserves.^[17]

Contents

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• 1 Process
• 2 History
  • 2.1 In Japan
  • 2.2 After 2007
  • 2.3 Amounts
  • 2.4 QE1, QE2, and QE3
• 3 Effectiveness
• 4 Risks
• 5 Comparison with other instruments
  • 5.1 Qualitative easing
  • 5.2 Credit easing
  • 5.3 Printing money
  • 5.4 Altering debt maturity structure
• 6 See also
• 7 References
• 8 External links

Process

Ordinarily, a central bank conducts monetary policy by raising or lowering its interest rate target for the inter-bank interest rate. A central bank generally achieves its interest rate target mainly through open market operations, where the central bank buys or sells short-term government bonds from banks and other financial institutions.^[11][13] When the central bank disburses or collects payment for these bonds, it alters the amount of money in the economy, while simultaneously affecting the price (and thereby the yield) for short-term government bonds. This in turn affects the interbank interest rates.^[18][19]

If the nominal interest rate is at or very near zero, the central bank cannot lower it further. Such a situation, called a liquidity trap,^[20] can occur, for example, during deflation or when inflation is very low.^[21] In such a situation, the central bank may perform quantitative easing by purchasing a pre-determined amount of bonds or other assets from financial institutions without reference to the interest rate.^[5][22] The goal of this policy is to increase the money supply rather than to decrease the interest rate, which cannot be decreased further.^[23] This is often considered a "last resort" to stimulate the economy.^[24][25]

Quantitative easing, and monetary policy in general, can only be carried out if the central bank controls the currency used. The central banks of countries in the Eurozone, for example, cannot unilaterally expand their money supply, and thus cannot employ quantitative easing. They must instead rely on the European Central Bank (ECB) to set monetary policy.^[26]

History

In Japan

The original Japanese expression‎ for quantitative easing (量的金融緩和, ryōteki kin'yū kanwa), was used for the first time by a Central Bank in the Bank of Japan's publications. The Bank of Japan has claimed that the central bank adopted a policy with this name on 19 March 2001.^[27] However, the Bank of Japan's official monetary policy announcement of this date does not make any use of this expression‎ (or any phrase using "quantitative") in either the Japanese original statement or its English translation.^[28] Indeed, the Bank of Japan had for years, including as late as February 2001, claimed that "quantitative easing … is not effective" and rejected its use for monetary policy.^[29] Speeches by the Bank of Japan leadership in 2001 gradually, and ex post, hardened the subsequent official Bank of Japan stance that the policy adopted by the Bank of Japan on March 19, 2001 was in fact quantitative easing. This became the established official view, especially after Toshihiko Fukui was appointed governor in February 2003. The use by the Bank of Japan is not the origin of the term quantitative easing or its Japanese original (ryoteki kinyu kanwa). This expression‎ had been used since the mid-1990s by critics of the Bank of Japan and its monetary policy.

The earliest written record of the phrase and concept of "quantitative easing" has been attributed to the economist Dr Richard Werner, Professor of International Banking at the School of Management, University of Southampton (UK). At the time working as chief economist of Jardine Fleming Securities (Asia) Ltd. in Tokyo, he coined the expression‎ in 1994 during presentations to institutional investors in Tokyo. It is also, among others, in the title of an article published on September 2, 1995, in the Nihon Keizai Shinbun (Nikkei).^[30] According to its author, he used this phrase in order to propose a new form of monetary stimulation policy by the central bank that relied neither on interest rate reductions (which Werner claimed in his Nikkei article would be ineffective) nor on the conventional monetarist policy prescription of expanding the money supply (e.g. through "printing money", expanding high powered money, expanding bank reserves or boosting deposit aggregates such as M2 —all of which Werner also claimed would be ineffective).^[31] Instead, Werner argued, it was necessary and sufficient for an economic recovery to boost "credit creation", through a number of measures.^[30] He also suggested direct purchases of non-performing assets from the banks by the central bank; direct lending to companies and the government by the central bank; purchases of commercial paper, other debt, and equity instruments from companies by the central bank; and stopping the issuance of government bonds to fund the public sector borrowing requirement, instead having the government borrow directly from banks through a standard loan contract.^[32][33]

Quantitative easing was used unsuccessfully by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s.^{[14][34][35][31]} The Bank of Japan has maintained short-term interest rates at close to zero since 1999. With quantitative easing, it flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves, and therefore little risk of a liquidity shortage.^[36] The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero. It also bought asset-backed securities and equities, and extended the terms of its commercial paper purchasing operation.^[37]

After 2007

More recently, similar policies have been used by the United States, the United Kingdom and the Eurozone during the Financial crisis of 2007–2010. Quantitative easing was used by these countries as their risk-free short-term nominal interest rates are either at, or close to, zero. In US, this interest rate is the federal funds rate. In UK, it is the official bank rate.

During the peak of the financial crisis in 2008, in the United States the Federal Reserve expanded its balance sheet dramatically by adding new assets and new liabilities without "sterilizing" these by corresponding subtractions. In the same period the United Kingdom also used quantitative easing as an additional arm of its monetary policy in order to alleviate its financial crisis.^[38][39][40]

The European Central Bank has used 12-month and 36-month long term refinancing operations (LTRO) (forms of quantitative easing without referring to them as such^[41]) through a process of expanding the assets that banks can use as collateral that can be posted to the ECB in return for euros. This process has led to bonds being "structured for the ECB".^[42] By comparison the other central banks were very restrictive in terms of the collateral they accept: the US Federal Reserve used to accept primarily treasuries (in the first half of 2009 it bought almost any relatively safe dollar-denominated securities); the Bank of England applied a large haircut.

During its QE programme, the Bank of England bought gilts from financial institutions, along with a smaller amount of relatively high-quality debt issued by private companies.^[23] The banks, insurance companies and pension funds can then use the money they have received for lending or even to buy back more bonds from the bank. The central bank can also lend the new money to private banks or buy assets from banks in exchange for currency.^{[citation needed]} These have the effect of depressing interest yields on government bonds and similar investments, making it cheaper for business to raise capital.^[43] Another side effect is that investors will switch to other investments, such as shares, boosting their price and thus encouraging consumption.^[23] QE can reduce interbank overnight interest rates, and thereby encourage banks to loan money to higher interest-paying and financially weaker bodies.

Amounts

The US Federal Reserve held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late November 2008, the Fed started buying $600 billion in Mortgage-backed securities (MBS).^[44] By March 2009, it held $1.75 trillion of bank debt, MBS, and Treasury notes, and reached a peak of $2.1 trillion in June 2010. Further purchases were halted as the economy had started to improve, but resumed in August 2010 when the Fed decided the economy was not growing robustly. After the halt in June holdings started falling naturally as debt matured and were projected to fall to $1.7 trillion by 2012. The Fed's revised goal became to keep holdings at the $2.054 trillion level. To maintain that level, the Fed bought $30 billion in 2–10 year Treasury notes a month. In November 2010, the Fed announced a second round of quantitative easing, or "QE2", buying $600 billion of Treasury securities by the end of the second quarter of 2011.^[45][46]

The Bank of England had purchased around £165 billion of assets by September 2009 and around £175 billion of assets by end of October 2010.^[47] At its meeting in November 2010, the Monetary Policy Committee (MPC) voted to increase total asset purchases to £200 billion. Most of the assets purchased have been UK government securities (gilts), the Bank has also been purchasing smaller quantities of high-quality private sector assets.^[48] In December 2010 MPC member Adam Posen called for a £50 billion expansion of the Bank's quantitative easing programme, whilst his colleague Andrew Sentance has called for an increase in interest rates due to inflation being above the target rate of 2%.^[49] In October 2011, the Bank of England announced it would undertake another round of QE, creating an additional £75 billion,^[50] and in February 2012 it announced an additional £50 billion,^[51] bringing the total amount to £325 billion. The Bank of England has said that it will not buy more than 70% of any issue of government debt.^[52] This means that at least 30% of each issue of government debt will have to be bought by other institutions.

The European Central Bank (ECB) said it would focus efforts on buying covered bonds, a form of corporate debt. It signalled initial purchases would be worth about ?60 billion in May 2009. ^[53]

The Bank of Japan (BOJ) increased the commercial bank current account balance from ¥5 trillion yen to ¥35 trillion (approximately US$300 billion) over a 4 year period starting in March 2001. As well, the BOJ tripled the quantity of long-term Japan government bonds it could purchase on a monthly basis. In early October 2010, the BOJ announced that it would examine the purchase of ¥5 trillion (US$60 billion) in assets. This was an attempt to push the value of the yen versus the US dollar down to stimulate the local economy by making their exports cheaper; it did not work.^[54] On 4 August 2011 the bank announced a unilateral move to increase the amount from ¥40 trillion (US$504 billion) to a total of ¥50 trillion (US$630 billion).^[55][56] In October 2011 the Bank of Japan expanded its asset purchase program by ¥5 trillion ($66bn) to a total of ¥55 trillion.^[57]

QE1, QE2, and QE3

The expression‎ "QE2" became a "ubiquitous nickname" in 2010, usually used to refer to a second round of quantitative easing by central banks.^[58] It was first used, however, by Richard Werner live on CNBC on 22 September 2009. He argued that 'true quantitative easing' was needed, namely an expansion in productive credit creation. This required a second attempt by central banks, "a kind of QE2".^[59]Meanwhile, the expression‎ is today mainly used to refer to a second round of what Prof. Werner would consider the 'wrong type' of QE.

In retrospect, the round of quantitative easing preceding QE2 may be called "QE1". Similarly, "QE3" refers to proposals for an additional round of quantitative easing following QE2.^[60]

Effectiveness

According to the IMF, the quantitative easing policies undertaken by the central banks of the major developed countries since the beginning of the late-2000s financial crisis have contributed to the reduction in systemic risks following the bankruptcy of Lehman Brothers. The IMF states that the policies also contributed to the improvements in market confidence and the bottoming out of the recession in the G-7 economies in the second half of 2009.^[61]

Economist Martin Feldstein argues that QE2 led to a rise in the stock-market in the second half of 2010, which in turn contributed to increasing consumption and the strong performance of the US economy in late-2010.^[62]

In November 2010, a group of conservative Republican economists and political activists released an open letter to Federal Reserve Chairman Ben Bernanke questioning the efficacy of the Fed's QE program. The Fed responded that their actions reflected the economic environment of high unemployment and low inflation.^[63]

Risks

Quantitative easing may cause higher inflation than desired if the amount of easing required is overestimated, and too much money is created.^[16] On the other hand, it can fail if banks remain reluctant to lend money to small business and households in order to spur demand. Quantitative easing can effectively ease the process of deleveraging as it lowers yields. But in the context of a global economy, lower interest rates may contribute to asset bubbles in other economies.^{[citation needed]}

An increase in money supply has an inflationary effect (as indicated by an increase in the annual rate of inflation). There is a time lag between money growth and inflation, inflationary pressures associated with money growth from QE could build before the central bank acts to counter them.^[64] Inflationary risks are mitigated if the system's economy outgrows the pace of the increase of the money supply from the easing. If production in an economy increases because of the increased money supply, the value of a unit of currency may also increase, even though there is more currency available. For example, if a nation's economy were to spur a significant increase in output at a rate at least as high as the amount of debt monetized, the inflationary pressures would be equalized. This can only happen if member banks actually lend the excess money out instead of hoarding the extra cash. During times of high economic output, the central bank always has the option of restoring the reserves back to higher levels through raising of interest rates or other means, effectively reversing the easing steps taken.

On the other hand, in economies when the monetary demand is highly inelastic with respect to interest rates, or interest rates are close to zero (symptoms which imply a liquidity trap), quantitative easing can be implemented in order to further boost monetary supply, and assuming that the economy is well below potential (inside the production possibilities frontier), the inflationary effect would not be present at all, or in a much smaller proportion.

Increasing the money supply tends to depreciate a country's exchange rates versus other currencies. This feature of QE directly benefits exporters residing in the country performing QE and also debtors whose debts are denominated in that currency, for as the currency deval‎ues so does the debt. However, it directly harms creditors and holders of the currency as the real value of their holdings decrease. Deval‎uation of a currency also directly harms importers as the cost of imported goods is inflated by the deval‎uation of the currency.^[65]

The new money could be used by the banks to invest in emerging markets, commodity-based economies, commodities themselves and non-local opportunities rather than to lend to local businesses that are having difficulty getting loans.^[66]

Comparison with other instruments

Qualitative easing

Professor Willem Buiter, of the London School of Economics, has proposed a terminology to distinguish quantitative easing, or an expansion of a central bank's balance sheet, from what he terms qualitative easing, or the process of a central bank adding riskier assets onto its balance sheet:

Quantitative easing is an increase in the size of the balance sheet of the central bank through an increase [in its] monetary liabilities (base money), holding constant the composition of its assets. Asset composition can be defined as the proportional shares of the different financial instruments held by the central bank in the total value of its assets. An almost equivalent definition would be that quantitative easing is an increase in the size of the balance sheet of the central bank through an increase in its monetary liabilities that holds constant the (average) liquidity and riskiness of its asset portfolio. Qualitative easing is a shift in the composition of the assets of the central bank towards less liquid and riskier assets, holding constant the size of the balance sheet (and the official policy rate and the rest of the list of usual suspects). The less liquid and more risky assets can be private securities as well as sovereign or sovereign-guaranteed instruments. All forms of risk, including credit risk (default risk) are included.^[67]

Credit easing

In introducing the Federal Reserve's response to the 2008–9 financial crisis, Fed Chairman Ben Bernanke distinguished the new programme, which he termed "credit easing" from Japanese-style quantitative easing. In his speech, he announced:

Our approach—which could be described as "credit easing"—resembles quantitative easing in one respect: It involves an expansion of the central bank's balance sheet. However, in a pure QE regime, the focus of policy is the quantity of bank reserves, which are liabilities of the central bank; the composition of loans and securities on the asset side of the central bank's balance sheet is incidental. Indeed, although the Bank of Japan's policy approach during the QE period was quite multifaceted, the overall stance of its policy was gauged primarily in terms of its target for bank reserves. In contrast, the Federal Reserve's credit easing approach focuses on the mix of loans and securities that it holds and on how this composition of assets affects credit conditions for households and businesses.^[68]

Credit easing involves increasing the money supply by the purchase not of government bonds, but of private sector assets such as corporate bonds and residential mortgage-backed securities.^[69][70] When undertaking credit easing, the Federal Reserve increases the money supply not by buying government debt, but instead by buying private sector assets including residential mortgage-backed securities.^[69][70] In 2010, the Federal Reserve purchased $1.25 trillion of mortgage-backed securities (MBS) in order to support the sagging mortgage market. These purchases increased the monetary base in a way similar to a purchase of government securities.^[71]

Printing money

Quantitative easing has been nicknamed "printing money" by some members of the media,^[72][73][74] central bankers,^[75] and financial analysts.^[76][77] However, central banks state that the use of the newly created money is different in QE. With QE, the newly created money is used for buying government bonds or other financial assets, whereas the term printing money usually implies that the newly minted money is used to directly finance government deficits or pay off government debt (also known as monetizing the government debt).^[72]

Central banks in most developed nations (e.g., UK, US, Japan, and EU) are forbidden by law to buy government debt directly from the government and must instead buy it from the secondary market.^[71][78] This two-step process, where the government sells bonds to private entities which the central bank then buys, has been called "monetizing the debt" by many analysts.^[71] The distinguishing characteristic between QE and monetizing debt is that with QE, the central bank is creating money to stimulate the economy, not to finance government spending. Also, the central bank has the stated intention of reversing the QE when the economy has recovered (by selling the government bonds and other financial assets back into the market).^[72] The only effective way to determine whether a central bank has monetized debt is to compare its performance relative to its stated objectives. Many central banks have adopted an inflation target. It is likely that a central bank is monetizing the debt if it continues to buy government debt when inflation is above target, and the government has problems with debt-financing.^[71]

Ben Bernanke remarked in 2002 that the US Government had a technology called the printing press, or today its electronic equivalent, so that if rates reached zero and deflation was threatened the government could always act to ensure deflation was prevented. He said, however, that the Government would not print money and distribute it "willy nilly" but would rather focus its efforts in certain areas (for example, buying federal agency debt securities and mortgage-backed securities).^[79][80] According to economist Robert McTeer, former president of the Federal Reserve Bank of Dallas, there is nothing wrong with printing money during a recession, and quantitative easing is different from traditional monetary policy "only in its magnitude and pre-announcement of amount and timing".^[81][82] Richard W. Fisher, president of the Federal Reserve Bank of Dallas, warned that a potential risk of QE is, "the risk of being perceived as embarking on the slippery slope of debt monetization. We know that once a central bank is perceived as targeting government debt yields at a time of persistent budget deficits, concern about debt monetization quickly arises." and later in the same speech states that the Fed is monetizing the government debt, "The math of this new exercise is readily transparent: The Federal Reserve will buy $110 billion a month in Treasuries, an amount that, annualized, represents the projected deficit of the federal government for next year. For the next eight months, the nation’s central bank will be monetizing the federal debt."^[83]

Altering debt maturity structure

See also: Operation Twist

Based on research reassessing the effectiveness of the US Federal Open Market Committee action in 1961 known as Operation Twist, The Economist has posited that a similar restructuring of the supply of different types of debt would have an effect equal to that of QE.^[84] Such action would allow finance ministries (e.g., the US Department of the Treasury) a role in the process now reserved for central banks.^[84]