Federal Reserve Chairman Ben Bernanke, in remarks delivered in London today, said the Fed isn�t pursuing the quantitative easing approach to monetary policy that the Bank of Japan pursued from 2001 to 2006. That�s expanding the liability side of the central bank�s balance sheet, pumping more and more reserves into the banking system and targeting them at particular markets. In that approach, he said, �the composition of loans and securities on the asset side of the central bank�s balance sheet is incidental.�Via the WSJ
The Fed, instead, is focused on the asset side of its balance sheet � �on the mix of loans securities it holds and on how this composition of assets affects credit conditions for households and businesses.� Call it �credit easing,� he said. The phrase was adopted by the Fed after pondering several other labels for its new approach.
. This is, in fact, what Willem Buiter refers to as qualitative easing
. Let me suggest that the first author of a money-and-banking text that has either qualitative or credit easing in its table of contents is going to make some sales.
Labels: banking, economics, Federal Reserve