How quantitative easing works

Asset purchases, also known as quantitative easing or QE, are one of the tools that we at the ECB use to support economic growth across the euro area and bring inflation to our 2% target.

Explore how the asset purchase programme works

  1. The European Central Bank buys bonds from banks.
  2. This increases the price of these bonds and creates money in the banking system.
  3. As a consequence, a wide range of interest rates fall and loans become cheaper.
  4. Businesses and people are able to borrow more and spend less to repay their debts.
  5. As a result, consumption and investment receive a boost.
  6. Higher consumption and more investment support economic growth and job creation.
  7. As prices rise, the ECB achieves an inflation rate of 2% over the medium term.

Explore how the asset purchase programme works


Source: European Central Bank

Published: 9 December 2016

Updated: 25 August 2021

The above presentation was created for educational purposes.


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