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3/3/09

Moneywise: Britain - Is printing more money the answer?

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Britain - Is printing more money the answer?

With the interest rate rapidly approaching zero, the chancellor Alistair Darling is this week expected to give the Bank of England permission to print more money in an effort to revive the economy. The central bank is expected to announce another base rate cut on 5 March; but with this already at an historical low of 1%, it is fast running out of options to kick-start the UK’s flagging economy. It is anticipated that, immediately after the cut is announced, Darling will give the government’s formal approval for the Bank of England to inject an additional euro 160 billion into the economy through a measure known as quantitative easing.Quantitative easing is often referred to as printing money, but technically no physical notes are produced. Instead, the Bank of England creates more money for itself electronically. The new money is then used to buy assets, such as gilts and bonds, from banks, insurers and pension providers.

Note EU-Digest: Quantitative Easing - Its all economic Hocus Pocus which turns fantasy into Monopoly Money.

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