Quantitative easing explained

As the world suffers its worst recession since the second world war, policy makers are searching for the best tools to limit the downturn. Central banks have rapidly lowered interest rates in order to reduce the cost of borrowing. The hope is to stimulate spending in the economy now.

So far, it has been to no avail. Confidence disappeared from banks, companies and households in the autumn of 2008 and unemployment is rising fast in 2009. Without an obvious source of fresh demand, central banks are moving to open the way to more unorthodox approaches to address the crisis.

One of those is quantitative easing. Our interactive feature explains how quantitative easing works and how this policy may stimulate the economy.