Credit Easing
 |
Definition of 'Credit Easing'Policy tools used by central banks to make credit more readily available in the event of a financial crisis, such as the one experienced in 2007-2008. In the United States, the policy tools, as described by Federal Reserve Chairman Ben Bernanke in early 2009, include "lending to financial institutions, providing liquidity directly to key credit markets and buying longer-term securities."The Fed implemented these tools because it needed a way to make interest rates go down and make credit more available to individuals and businesses even though the federal funds rate was already near zero. |
 |
Investopedia explains 'Credit Easing'Credit easing entails an expansion and focus on the asset side of the Federal Reserve's balance sheet. This, according to Ben Bernanke, differentiates credit easing from the policy of quantitative easing used by Japan's central bank from 2001 to 2006. Although both methods involve the expansion of the central bank's balance sheet, quantitative easing focused on the liability side of the Bank of Japan's balance sheet. |
Related Definitions
Articles Of Interest
-
How The U.S. Government Formulates Monetary Policy
Learn about the tools the Fed uses to influence interest rates and general economic conditions. -
How The Federal Reserve Manages Money Supply
Find out how the Fed manages bank reserves and this contributes to a stable economy. -
How The Federal Reserve Was Formed
Find out how this institution has stabilized the U.S. economy during economic downturn. -
When The Federal Reserve Intervenes (And Why)
The Federal Reserve doesn't interfere with the economy every time it flounders. Find out more here. -
The Fed's New Tools For Manipulating The Economy
The economy can be volatile when left to its own devices. Find out how the Fed smoothes things out. -
How Much Influence Does The Fed Have?
Find out how current financial policies may affect your portfolio's future returns. -
Ben Bernanke: Background And Philosophy
Get some insight into the man at the forefront of key U.S economic decisions. -
Exploring The Current Account In The Balance Of Payments
Learn how a country's current account balance reflects the country's economic health. -
What Is The Balance Of Payments?
The balance of payments helps countries to track how much money is coming in and how much money is going out. Learn more about BOPs here. -
Economic Indicators That Do-It-Yourself Investors Should Know
Understanding these investing tools will put the market in your hands.
Free Annual Reports
