<P> A central bank enacts quantitative easing by purchasing--regardless of interest rates--a predetermined quantity of bonds or other financial assets on financial markets from private financial institutions . This action increases the excess reserves that banks hold . The goal of this policy is to facilitate an expansion of private bank lending; if private banks increase lending, it would increase the money supply, though QE does directly increase the broad money supply even without further bank lending . Additionally, if the central bank also purchases financial instruments that are riskier than government bonds, it can also lower the interest yield of those assets (as those assets are more scarce in the market, and thus their prices go up correspondingly). </P> <P> Quantitative easing, and monetary policy in general, can only be carried out if the central bank controls the currency used in the country . The central banks of countries in the Eurozone, for example, cannot unilaterally decide to employ quantitative easing . They must instead rely on the European Central Bank's governing council (composed of all national central banks governors) to agree on a common monetary policy, which they (national central banks) implement . </P> <P> The US Federal Reserve belatedly implemented policies similar to the current quantitative easing during the Great Depression of the 1930s . Specifically, banks' excess reserves exceeded 6 percent in 1940, whereas they vanished during the entire postwar period until 2008 . Despite this fact, many commentators called the scope of the Federal Reserve quantitative easing program after the 2008 crisis "unprecedented". </P> <P> A policy termed' quantitative easing' (量 的 金融 緩和, ryōteki kin'yū kanwa) was first used by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s . The BOJ had maintained short - term interest rates at close to zero since 1999 . The Bank of Japan had for many years, and as late as February 2001, stated that "quantitative easing...is not effective" and rejected its use for monetary policy . </P>

When did the federal reserve start quantitative easing