A Study On Quantitative Easing Monetary Policy

Economic and financial environment has been changed greatly afterentering the21st century. In order to solve the sustained deflation orfinancial crisis, Japan and the United States have adopted thequantitative easing policy which is different from traditional monetarypolicy operations. It is the first time in the history of the world economyabout the global large-scale quantitative easing. The central banksmaintain short-term interest rates close to zero by continuing to cutinterest rates and put the huge amount of liquidity into the market bybuying long-term bonds. It has influenced to the world economy.so itis necessary to analysis the quantitative easing in-depth.Therefore, this article describes the theoretical origin of thequantitative easing policy from the Keynesian liquidity trap, the IS-LMmodel under the liquidity trap, Krugman liquidity trap and the zerointerest rate as well as debt deflation theory; then elaborates thetheoretical framework of quantitative easing of monetary policysystematically, including the policy objectives and transmissionmechanism of the quantitative easing policy. Through analysis andcomparison, it can derive the difference between quantitative easingmonetary policy and monetary policy.Based on the theoretical analysis, the paper systematic analyzes the practical operation of the quantitative easing policy. It analyzes thefirst time to quantify the loose monetary policy operations of Japan from2006to2001, then analyzes the quantitative easing monetary policypractice aspects in Japan and the United States during the financialcrisis, including policy background, the practical implementation of theoperation, effects, through the theory and practice, history and reality,comparative analysis and summary. Finally, the paper discusses thepossible of the third round of quantitative easing monetary policy.Finally, in the view of Chinese inflationary pressures, the effectof the central bank's monetary policy, the damaging of foreign exchangereserves, deterioration of the export situation and the development ofsmall businesses, the paper analyze the negative impact of quantitativeeasing of monetary policy on China's macro-economy and financial system.The paper measures proposed to deal with the quantitative easing fromthe Suffered huge losses from foreign exchange reserves, promotingreserve diversification, industrial restructuring, keeping the RMBexchange rate stable and the process of internationalization of the RMB.