How the Quantitative Easing Programs of the European Central Bank and the United States Federal Reserve Differ

Abstract

The global financial world has seen a decade of quick and enormous amounts of capital injected into different economies around the world. This is known as quantitative easing. This extreme form of monetary policy has been vital for the global economy. The two largest central banks of the free world are the Federal Reserve in the United States and the European Central Bank. This academic paper focuses on the different methods of quantitative easing by the two central banks. The media often portrays them and their respective policies as indistinguishable. The significance of both of these institutions and their policies are vital for the functioning of the current world. Understanding how and why they operate on such policies is important. Most importantly it is crucial to understand how they affect the everyday life of the public. This paper pursues to deepen the understanding on how and why the central banks have such dissimilar implementation of their respective quantitative easing. This academic paper was concluded by researching existing reports by the financial institutions themselves as well previously recorded reports. The central banks share some characteristics, but in fact have contrasting policies as well as arguments on how they implement their strategies. There is a significant reasoning why the central banks implement their strategies in differing ways. The historical, socioeconomic, and markets in general are dissimilar in the realm of the European Central Bank and the Federal Reserve in the United States.