Abstract

The global economy is awash with successive waves of liquidity generated over the past few years by the four most advanced economies — the US, the European Union, Japan and the UK, known as the G4. This liquidity has taken the form of Quantitative easing (QE).When zero rates of interest have failed to stimulate their economies, these countries have resorted to large-scale asset purchases by their central banks, such as corporate bonds or mortgage-backed securities, to pump more money into the banking system. The aim is to extend credit to business and industry and encourage consumption. In the immediate aftermath of the 2008 crisis, when there was a danger of financial collapse, both advanced and emerging economies adopted stimulus packages, to revive demand, maintain trade flows and avoid large scale unemployment. During the crisis phase of 2008-09, QE played an important role in crisis management, helping advanced and emerging economies alike.