第28章金融政策と銀行規制

The most powerful and commonly used of the three traditional tools of monetary policy—open market operations—works by expanding or contracting the money supply in a way that influences the interest rate. In late 2008, as the U.S. economy struggled with recession, the Federal Reserve had already reduced the interest rate to near-zero. With the recession still ongoing, the Fed decided to adopt an innovative and nontraditional policy known as quantitative easing (QE). This is the purchase of long-term government and private mortgage-backed securities by central banks to make credit available so as to stimulate aggregate demand.

Quantitative easing differed from traditional monetary policy in several key ways. First, it involved the Fed purchasing long term Treasury bonds, rather than short term Treasury bills. In 2008, however, it was impossible to stimulate the economy any further by lowering short term rates because they were already as low as they could get. (Read the closing Bring it Home feature for more on this.) Therefore, Chairman Bernanke sought to lower long-term rates utilizing quantitative easing.

This leads to a second way QE is different from traditional monetary policy. Instead of purchasing Treasury securities, the Fed also began purchasing private mortgage-backed securities, something it had never done before. During the financial crisis, which precipitated the recession, mortgage-backed securities were termed “toxic assets,” because when the housing market collapsed, no one knew what these securities were worth, which put the financial institutions which were holding those securities on very shaky ground. By offering to purchase mortgage-backed securities, the Fed was both pushing long term interest rates down and also removing possibly “toxic assets” from the balance sheets of private financial firms, which would strengthen the financial system.

We usually think of the quantitative easing policies that the Federal Reserve adopted (as did other central banks around the world) as temporary emergency measures. If these steps are to be temporary, then the Federal Reserve will need to stop making these additional loans and sell off the financial securities it has accumulated. The concern is that the process of quantitative easing may prove more difficult to reverse than it was to enact. The evidence suggests that QE₁ was somewhat successful, but that QE₂ and QE₃ have been less so.

Fast forward to March 2020, when the Fed under the leadership of Jerome Powell promised another round of asset purchases which was dubbed by some as “QE4,” intended once again to provide liquidity to a distressed financial system in the wake of the pandemic. This round was much faster, increasing Fed assets by $2 trillion in just a few months. Recently, the Fed has begun to slow down the purchase of these assets once again through a taper, and the pace of the tapering is expected to increase through 2022. But as of the end of 2021, total Fed assets exceed $8 trillion, compared to $4 trillion in February 2020.

In a limited reserves environment, the central bank has three traditional tools to conduct monetary policy: open market operations, which involves buying and selling government bonds with banks; reserve requirements, which determine what level of reserves a bank is legally required to hold; and discount rates, which is the interest rate charged by the central bank on the loans that it gives to other commercial banks. In a limited reserves environment, the most commonly used tool is open market operations. Since the financial crisis, the U.S. banking system is in an ample reserves environment. The FOMC has moved away from the traditional tools of a limited reserve environment and now uses changes in the interest rate on reserve balances (IORB) as its main monetary policy tool.