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iPhone SE
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Not to be confused with Macintosh SE.
iPhone SE
iPhone SE in Silver
Brand
Apple Inc.
Slogan
A big step for small
Model
A1662 (US model)
A1723 (in most countries)
A1724 (China Mobile model)
Compatible networks
GSM, CDMA, 3G, EVDO, HSPA+, LTE
First released
March 31, 2016; 20 months ago (2016-03-31) (16 and 64 GB); March 21, 2017; 9 months ago (2017-03-21) (32 and 128 GB)
Availability by country
March 31, 2016[show]
Australia
Canada
China
France
Germany
Hong Kong
Japan
Russia
Singapore
United Kingdom
United States
April 5, 2016[show]
Austria
Italy
New Zealand
United Arab Emirates
April 6, 2016[show]
India
Switzerland
Serbia
Nepal
Lithuania
April 7, 2016[show]
Taiwan[1]
April 8, 2016[show]
Republic of Ireland
April 21, 2016[show]
Israel
April 26, 2016[show]
Colombia
Mexico
May 5, 2016[show]
Belarus
May 11, 2016[show]
Thailand
Chile
South Korea
Malaysia
May 28, 2016[show]
Philippines
March 31, 2017[show]
Indonesia
Discontinued
March 21, 2017 (16 and 64 GB)
Predecessor
iPhone 5S
iPhone 5C
Related
iPhone 6S (Plus)
Type
Smartphone
Form factor
Slate
Dimensions
123.8 mm (4.87 in) H
58.6 mm (2.31 in) W
7.6 mm (0.30 in) D
Weight
113 g (4.0 oz)
Operating system
Original: iOS 9.3
Current: iOS 11.2.1, released December 13, 2017 (2017-12-13)
System on chip
Apple A9
CPU
1.85 GHz dual-core 64-bit ARMv8-A "Twister"
GPU
PowerVR GT7600 (hexa-core)
Memory
2 GB LPDDR4 RAM[2]
Storage
Discontinued: 16 and 64 GB
Current: 32 and 128 GB
Battery
3.82 V 6.21 W·h (1,624 mA·h) Lithium-ion battery
Data inputs
Multi-touch touchscreen display, Apple M9 motion coprocessor, 3-axis gyroscope, accelerometer, digital compass, proximity sensor, ambient light sensor, Touch ID fingerprint reader
Display
4.0 in (100 mm) Retina Display, LED-backlit IPS LCD, 1136 × 640 pixel resolution (326 ppi)
Rear camera
Backlit Sony Exmor RS 12 MP (1.22 μm), dual-tone LED flash, autofocus, IR filter, burst mode, f/2.2 aperture, 4K video recording at 30 fps or 1080p at 30 or 60 fps, slow-motion video (1080p at 120 fps and 720p at 240 fps)
Front camera
1.2 MP, f/2.4 aperture, exposure control, face detection, auto-HDR, Retina Flash, 720p video recording
Sound
Mono speaker, 3.5 mm stereo audio jack
Connectivity
Lightning Port, stereo audio jack
SAR
Head SAR: 1.17 W/kg
Body SAR: 1.19 W/kg
Website
www.apple.com/iphone-se/
This article is part of a series on the
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The iPhone SE is a smartphone designed and marketed by Apple Inc. as part of the iPhone series of devices. It was unveiled on March 21, 2016, at Apple's Cupertino headquarters, and was released on March 31, 2016. Despite chronologically succeeding the iPhone 6 family's launch, The iPhone SE serves as a successor of the iPhone 5S. It maintains the 4-inch screen size and largely identical design to the 5S, but includes selected hardware upgrades from the larger iPhone 6S model, including its updated processor, rear camera, and support for iOS 10 and iOS 11 software features, such as Apple Pay, always-on Siri activation, and Live Photos. It also features a new color in Rose Gold along with the standard Space Gray, Silver and Gold. The model was re-released with new storage options on March 24, 2017.
The iPhone SE was received positively by critics, who noted its familiar form factor and design, improved hardware over previous 4-inch iPhone models, as well as its overall performance and battery life.
Contents
[hide]
1 History
2 Specifications
2.1 Design
2.2 Hardware
2.3 Software
3 Reception
4 Timeline of models
5 See also
6 References
7 External links
History[edit]
The previous major redesign of the iPhone, the 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus, resulted in larger screen sizes. However, a significant number of customers preferred the 4-inch screen size of the iPhone 5 and 5S; the 5S was the second-most popular iPhone after the 6, ahead of the 6S. Apple stated in their event that they sold 30 million 4-inch iPhones in 2015. Furthermore, the 5 and 5S design was regarded as having "long been the golden child of Apple phone design and a benchmark for phones in general,". The iPhone 5 was described as "elegance rooted in the way the aluminum and glass work together. It felt streamlined, yet substantial, which is different from iPhone 6, which feels substantial in size alone. Plus, unlike the ubiquitous rounded corners of the 6, iPhone 5 didn’t really look like anything else on the market at the time."[3][4]
Apple's SVP of marketing Phil Schiller stated to Fortune that the "SE" in its name stood for "special edition".[5]
Specifications[edit]
Design[edit]
The exterior design of the iPhone SE is nearly identical to that of the iPhone 5S and the iPhone 5, with the exception of matte-chamfered edges and an inset stainless steel rear Apple logo. Like the iPhone 6S, the iPhone SE is available in space gray, silver, gold and rose gold finishes.[6] Apple stated that cases designed to fit the 5 and the 5S will also fit an iPhone SE, as the three phones have exactly the same dimensions.[7]
Hardware[edit]
The technology specifications of the iPhone SE are similar to the iPhone 6S. This meant that at its launch, the iPhone SE was more powerful than the existing iPhone 6 despite the SE debuting as the entry-level offering while the 6 was the midrange offering in the lineup, which was rectified in September 2016 when the 6 was discontinued and its midrange slot given over to the 6S.[3][8]
As with the 6S, the iPhone SE incorporates the Apple A9 system-on-chip (SoC) with an M9 motion coprocessor and supports near field communication for Apple Pay. The A9 SoC on the iPhone SE outperforms the one on the 6s thanks to the SE's smaller screen and fewer pixels; for comparison, the iPhone SE has a GeekBench score of 2400 on the single core and 4069 on the multi core which compares to the iPhone 6s's score of 2316 on single core and 3922 on multi core. The SE's 4-inch Retina Display at 326 ppi is the same as the preceding 5S.[9] Unlike the iPhone 6S and 6S Plus, the SE does not include 3D Touch, nor the updated faster second-generation Touch ID sensor from the 6S and 6S Plus,[9] or its barometer.[10]
On launch, it was released in models with either 16 or 64 GB of internal storage; on March 21, 2017, Apple announced that these models would be replaced by new 32 and 128 GB models at the same launch price points, releasing on March 24, 2017.[11][12]
It features the same 12 megapixel, with pixels 1.22µm in size,[13] rear-facing camera as the 6S, with the ability to record 720p at 30 frames per second, for normal video recording and up to 240 fps for slow motion. It also features 1080p at 120 or 60 fps and 4K at 30 fps, as well as faster focus. Despite the upgraded rear camera, it does not feature the same front-facing camera, instead using a 1.2 megapixel sensor with f/2.4 aperture, but benefiting from the improved image signal processor in the A9 chip, and support for the software "Retina Flash" feature (which allows the display itself to be used as a flash on the front-facing camera).[14][10][15][16][17]
In North America, the iPhone SE comes in two hardware models: the A1662 model sold unlocked by AT&T, T-Mobile, and Verizon, and the A1723 model sold by Sprint or Canadian carriers.[18]
Software[edit]
See also: iOS, iOS 9, iOS 10, and iOS 11
iPhone SE shipped with iOS 9.3, supporting iPhone 6 and 6S-exclusive features such as Apple Pay, Live Photos, Retina Flash and always-on Siri voice activation.[6][10][16]
Reception[edit]
Lauren Goode of The Verge considered the iPhone SE to be "a much-improved, well-designed, small phone with great battery life" and a "kickass upgrade" for existing owners of the 4S or 5S models, noting the device's familiar form factor, high performance (going as far as considering the screen size itself to be the only hindrance to multitasking and certain apps), and improved battery life. The camera's quality and functionality were also praised, arguing that the iPhone SE was a "completely pocketable and powerful little consumer camera" that outperformed other smartphones in its price range. Giving the device an 8.7 out of 10, Goode argued that "the iPhone SE is not a tiny little engine of innovation. It's today's tech in yesterday's phone body. As with anything, we should be wary of giving too much praise to something that's just doing its job."[19]
CNET was similarly positive, considering the iPhone SE to be a "great choice at the small end, with no compromises", albeit recommending that purchasers avoid the 16 GB model; the iPhone SE was the last iPhone model that offered 16 GB as its lowest storage capacity; this option was phased out on both the iPhone 7, and later the SE.[20][12] CNET also lauded Apple for accomplishing the task of adapting the 6S's hardware to three different form factors; the smaller SE, 4.7-inch 6S, and 5.5-inch 6S Plus.[20][12] Consequently the iPhone SE is more powerful than the existing iPhone 6 despite the SE debuting as the entry-level offering while the 6 was the midrange offering in the lineup, which was rectified in September 2016 when the 6 was discontinued instead of being moved to entry-level and its midrange slot given over to the 6S. Apple's move to phase out the older iPhone 5S and 6 (along with their A7 and A8 SoC, respectively) earlier, rather than produce them for three years like earlier iPhones, allowed them to simplify their manufacturing and software support.[3][8]
Timeline of models[edit]
Sources: Apple press release library[21]

See also[edit]
Apple Inc. portal
List of iOS devices
History of iPhone
Comparison of smartphones
References[edit]
Jump up ^ "iPhone SE 4/7開賣 5大電信公布預約日 | 重點新聞 | 中央社即時新聞 CNA NEWS". 中央通訊社 (in Chinese). Retrieved 28 June 2016.
Jump up ^ Miller, Chance (March 30, 2016). "First iPhone SE teardown reveals mainly 5s/6s parts inside, but a few surprises too". 9to5Mac. Retrieved March 31, 2016.
^ Jump up to: a b c "With the iPhone SE, Apple Returns to a Masterpiece of Design". Wired.com. 22 March 2016. Retrieved 1 April 2016.
Jump up ^ "iPhone SE Reviews: Apple's Strange Case Of Jekyll And Hyde". Forbes.com. 26 March 2016. Retrieved 1 April 2016.
Jump up ^ "What the iPhone SE stands for – and what we think it should stand for". TechRadar. Retrieved 21 March 2017.
^ Jump up to: a b "Apple shows off 4-inch iPhone SE, iOS 9.3". Geek.com. Ziff Davis. Retrieved 22 March 2016.
Jump up ^ "Yes, your old iPhone 5s case will fit on the new iPhone SE". Macworld. IDG. Retrieved 22 March 2016.
^ Jump up to: a b "Apple – Press Info – Apple Introduces iPhone SE — The Most Powerful Phone with a Four-inch Display". Apple. Retrieved 22 March 2016.
^ Jump up to: a b H., Victor (2016-03-21). "Apple iPhone SE TouchID is the same as in 5s, slower than iPhone 6s fingerprint sensor". PhoneArena. Retrieved 2016-03-22.
^ Jump up to: a b c "5 features you don't get with the iPhone SE". CNET. CBS Interactive. Retrieved 22 March 2016.
Jump up ^ "Apple doubles iPhone SE storage to 32GB and 128GB". The Verge. Retrieved 21 March 2017.
^ Jump up to: a b c "Minor iPhone bump turns the 7 and 7 Plus red, gives iPhone SE more storage". Ars Technica. Retrieved 21 March 2017.
Jump up ^ "iPhone SE Teardown". iFixit. Retrieved 2016-03-31.
Jump up ^ "Apple's Smaller iPhone SE Will Cost You $400". Wired. Conde Nast. Retrieved 22 March 2016.
Jump up ^ "The new iPhone SE finally makes a small phone feel powerful". The Verge. Retrieved 22 March 2016.
^ Jump up to: a b "iPhone SE vs. iPhone 6 and 6S: which Apple smartphone should you get?". The Verge. Vox Media. Retrieved 22 March 2016.
Jump up ^ "Apple iPhone SE launch: key points at a glance". The Guardian. Retrieved 21 March 2016.
Jump up ^ The iPhone SE Is Not Carrier Agnostic
Jump up ^ Goode, Lauren. "iPhone SE review: today's tech, yesterday's design". The Verge. Vox Media. Retrieved 28 September 2016.
^ Jump up to: a b "Apple iPhone SE review: Small wonder". CNET. CBS Interactive. Retrieved 28 September 2016.
Jump up ^ Apple Inc. (2004-2016). Press Release Library. Retrieved April 6, 2016.
External links[edit]
iPhone SE – official site
Preceded by
iPhone 5S iPhone SE
2016 Succeeded by
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Quantitative easing
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Quantitative easing (QE), also known as large-scale asset purchases,[1][2] is an expansionary monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to stimulate the economy and increase liquidity.[3][4] An unconventional form of monetary policy,[3] it is usually used when inflation is very low or negative, and standard expansionary monetary policy has become ineffective.[5][6][7][8] A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply.[9][10] This differs from the more usual policy of buying or selling short-term government bonds to keep interbank interest rates at a specified target value.[11][12][13][14]
Expansionary monetary policy to stimulate the economy typically involves the central bank buying short-term government bonds to lower short-term market interest rates.[15][16][17][18] However, when short-term interest rates reach or approach zero, this method can no longer work.[19] In such circumstances, monetary authorities may then use quantitative easing to further stimulate the economy, by buying specified quantities of financial assets without reference to interest rates, and by buying riskier or of longer maturity assets (other than short-term government bonds), thereby lowering interest rates further out on the yield curve.[20][21]
Quantitative easing can help ensure that inflation does not fall below a target.[14] Risks include the policy being more effective than intended in acting against deflation (leading to higher inflation in the longer term, due to increased money supply),[22] or not being effective enough if banks remain reluctant to lend and potential borrowers are unwilling to borrow.[23] According to the International Monetary Fund, the U.S. Federal Reserve System, and various economists, quantitative easing undertaken since the global financial crisis of 2007–08 has mitigated some of the economic problems since the crisis.[24][25][26]
Contents
[hide]
1 Process
2 History
2.1 Precedents
2.2 Japan before 2007
2.3 After 2007
2.3.1 US QE1, QE2, and QE3
2.3.2 United Kingdom
2.3.3 Europe
2.3.4 Scandinavia
2.3.5 Japan after 2007 and Abenomics
3 Economic impact
3.1 Effectiveness
3.2 Exchange rate effects
3.3 Counteracting a falling money supply
4 Risks
4.1 Impact on savings and pensions
4.2 Capital flight
4.3 Increased income and wealth inequality
4.4 Criticism by BRIC countries
4.5 Political risk
5 Related policies
5.1 Qualitative easing
5.2 Credit easing
5.3 Monetary financing
5.4 QE for the people
5.5 Altering debt maturity structure
6 See also
7 References
8 External links
Process[edit]
See also: Monetary policy
Standard central bank monetary policies are usually enacted by buying or selling government bonds on the open market to reach a desired target for the interbank interest rate. However, if a recession or depression continues even when a central bank has lowered interest rates to nearly zero, the central bank can no longer lower interest rates, a situation known as the liquidity trap. The central bank may then implement quantitative easing by buying financial assets without reference to interest rates. This policy is sometimes described as a last resort to stimulate the economy.[27][28]
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.[5][13] 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).
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.[29]
History[edit]
Precedents[edit]
The US Federal Reserve belatedly implemented policies similar to the current quantitative easing during the Great Depression of the 1930s.[30][31] Specifically, banks' excess reserves exceeded 6 percent in 1940, whereas they vanished during the entire postwar period until 2008.[32] Despite this fact, many commentators called the scope of the Federal Reserve quantitative easing program after the 2008 crisis "unprecedented".[33][34][35]
Japan before 2007[edit]
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.[20][36][37][38] 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.[39]
According to the Bank of Japan, the central bank adopted quantitative easing on 19 March 2001.[40][41] Under quantitative easing, the BOJ flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves and therefore little risk of a liquidity shortage.[42] The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero. It later also bought asset-backed securities and equities and extended the terms of its commercial paper–purchasing operation.[43] The BOJ increased the commercial bank current account balance from ¥5 trillion to ¥35 trillion (approximately US$300 billion) over a four-year period starting in March 2001. The BOJ also tripled the quantity of long-term Japan government bonds it could purchase on a monthly basis.[citation needed]
After 2007[edit]
Since the global financial crisis of 2007–08, policies similar to those undertaken by Japan have been used by the United States, the United Kingdom, and the Eurozone. Quantitative easing was used by these countries because their risk-free short-term nominal interest rates (termed the federal funds rate in the US, or the official bank rate in the UK) were either at or close to zero.
During the peak of the financial crisis in 2008, the US Federal Reserve expanded its balance sheet dramatically by adding new assets and new liabilities without "sterilizing" these by corresponding subtractions. In the same period, the United Kingdom also used quantitative easing as an additional arm of its monetary policy to alleviate its financial crisis.[44][45][46]
US QE1, QE2, and QE3 [edit]
Federal Reserve Holdings of Treasury Notes (blue) and Mortgage-Backed Securities (red)
The U.S. Federal Reserve System held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late November 2008, the Federal Reserve started buying $600 billion in mortgage-backed securities.[47] By March 2009, it held $1.75 trillion of bank debt, mortgage-backed securities, and Treasury notes; this amount reached a peak of $2.1 trillion in June 2010. Further purchases were halted as the economy started to improve, but resumed in August 2010 when the Fed decided the economy was not growing robustly. After the halt in June, holdings started falling naturally as debt matured and were projected to fall to $1.7 trillion by 2012. The Fed's revised goal became to keep holdings at $2.054 trillion. To maintain that level, the Fed bought $30 billion in two- to ten-year Treasury notes every month.[48]
In November 2010, the Fed announced a second round of quantitative easing, buying $600 billion of Treasury securities by the end of the second quarter of 2011.[49][50] The expression "QE2" became a ubiquitous nickname in 2010, used to refer to this second round of quantitative easing by US central banks.[51] Retrospectively, the round of quantitative easing preceding QE2 was called "QE1".[52][53]
A third round of quantitative easing, "QE3", was announced on 13 September 2012. In an 11–1 vote, the Federal Reserve decided to launch a new $40 billion per month, open-ended bond purchasing program of agency mortgage-backed securities. Additionally, the Federal Open Market Committee (FOMC) announced that it would likely maintain the federal funds rate near zero "at least through 2015."[54][55] According to NASDAQ.com, this is effectively a stimulus program that allows the Federal Reserve to relieve $40 billion per month of commercial housing market debt risk.[56] Because of its open-ended nature, QE3 has earned the popular nickname of "QE-Infinity."[57] On 12 December 2012, the FOMC announced an increase in the amount of open-ended purchases from $40 billion to $85 billion per month.[58]
On 19 June 2013, Ben Bernanke announced a "tapering" of some of the Fed's QE policies contingent upon continued positive economic data. Specifically, he said that the Fed could scale back its bond purchases from $85 billion to $65 billion a month during the upcoming September 2013 policy meeting.[59][not in citation given] He also suggested that the bond-buying program could wrap up by mid-2014.[60] While Bernanke did not announce an interest rate hike, he suggested that if inflation followed a 2% target rate and unemployment decreased to 6.5%, the Fed would likely start raising rates. The stock markets dropped by approximately 4.3% over the three trading days following Bernanke's announcement, with the Dow Jones dropping 659 points between 19 and 24 June, closing at 14,660 at the end of the day on 24 June.[61] On 18 September 2013, the Fed decided to hold off on scaling back its bond-buying program,[62] and announced in December 2013 that it would begin to taper its purchases in January 2014.[63] Purchases were halted on 29 October 2014[64] after accumulating $4.5 trillion in assets.[65]
United Kingdom[edit]
Immediate and delayed effects of quantitative easing.[66]
During its QE programme, the Bank of England bought gilts from financial institutions, along with a smaller amount of relatively high-quality debt issued by private companies.[67] The banks, insurance companies, and pension funds could then use the money they received for lending or even to buy back more bonds from the bank. Further, the central bank could lend the new money to private banks or buy assets from banks in exchange for currency.[citation needed] These measures have the effect of depressing interest yields on government bonds and similar investments, making it cheaper for business to raise capital.[68] Another side effect is that investors will switch to other investments, such as shares, boosting their price and thus encouraging consumption.[67] QE can reduce interbank overnight interest rates and thereby encourage banks to loan money to higher interest-paying and financially weaker bodies.
Beginning in March 2009, the Bank of England had purchased around £165 billion in assets as of September 2009 and around £175 billion in assets by the end of October 2009.[69] At its meeting in November 2009, the Monetary Policy Committee (MPC) voted to increase total asset purchases to £200 billion. Most of the assets purchased have been UK government securities (gilts); the Bank has also purchased smaller quantities of high-quality private-sector assets.[70] In December 2010, MPC member Adam Posen called for a £50 billion expansion of the Bank's quantitative easing programme, while his colleague Andrew Sentance has called for an increase in interest rates due to inflation being above the target rate of 2%.[71] In October 2011, the Bank of England announced that it would undertake another round of QE, creating an additional £75 billion.[72] In February 2012 it announced an additional £50 billion.[73] In July 2012 it announced another £50 billion,[74] bringing the total amount to £375 billion. The Bank has said that it will not buy more than 70% of any issue of government debt.[75] This means that at least 30% of any issue of government debt will have to be purchased and held by institutions other than the Bank of England. In 2012 the Bank estimated that quantitative easing had benefited households differentially according to the assets they hold; richer households have more assets.[76]
In August 2016, the Bank of England said it would buy an additional £60bn of UK government bonds and £10bn of corporate bonds, to address uncertainty over Brexit and worries about productivity and economic growth.[77]
Europe[edit]
The European Central Bank said that it would focus on buying covered bonds, a form of corporate debt. It signalled that its initial purchases would be worth about €60 billion in May 2009.[78]
At the beginning of 2013, the Swiss National Bank had the largest balance sheet relative to the size of the economy it was responsible for, at close to 100% of Switzerland's national output. A total of 12% of its reserves were in foreign equities. By contrast, the US Federal Reserve's holdings equalled about 20% of US GDP, while the European Central Bank's assets were worth 30% of GDP.[79]
In a dramatic change of policy, following the new Jackson Hole Consensus, on 22 January 2015 Mario Draghi, President of the European Central Bank, announced an 'expanded asset purchase programme': where €60 billion per month of euro-area bonds from central governments, agencies and European institutions would be bought. Beginning in March 2015, the stimulus was planned to last until September 2016 at the earliest with a total QE of at least €1.1 trillion. Mario Draghi announced the programme would continue: 'until we see a continued adjustment in the path of inflation', referring to the ECB's need to combat the growing threat of deflation across the eurozone in early 2015.[80][81]
On 10 March 2016, ECB increased its monthly bond purchases to €80 billion from €60 billion and started to include corporate bonds under the asset purchasing programme and announced new ultra-cheap four-year loans to banks.
Scandinavia[edit]
Swedish National Bank launched quantitative easing in February 2015, announcing government bond purchases of nearly 1.2 billion USD.[82] The annualised inflation rate in January 2015 was minus 0.3 percent, and the bank implied that Sweden's economy could slide into deflation.[82]
Japan after 2007 and Abenomics[edit]
See also: Abenomics
In early October 2010, the Bank of Japan announced that it would examine the purchase of ¥5 trillion (US$60 billion) in assets. This was an attempt to push down the value of the yen against the US dollar to stimulate the domestic economy by making Japanese exports cheaper; however, it was ineffective.[83]
On 4 August 2011 the BOJ announced a unilateral move to increase the commercial bank current account balance from ¥40 trillion (US$504 billion) to a total of ¥50 trillion (US$630 billion).[84][85] In October 2011, the Bank expanded its asset purchase program by ¥5 trillion ($66bn) to a total of ¥55 trillion.[86]
On 4 April 2013, the Bank of Japan announced that it would expand its asset purchase program by 60 to 70 trillion Yen a year. https://www.boj.or.jp/en/mopo/outline/qqe.htm/
The Bank hoped to bring Japan from deflation to inflation, aiming for 2% inflation. The amount of purchases was so large that it was expected to double the money supply.[87] This policy has been named Abenomics, as a portmanteau of economic policies and Shinzō Abe, the current Prime Minister of Japan.
On 31 October 2014, the BOJ announced the expansion of its bond buying program, to now buy 80 trillion Yen of bonds a year.[88]
Economic impact[edit]
Effectiveness[edit]
According to the International Monetary Fund (IMF), the quantitative easing policies undertaken by the central banks of the major developed countries since the beginning of the late-2000s financial crisis have contributed to the reduction in systemic risks following the bankruptcy of Lehman Brothers. The IMF states that the policies also contributed to the improvements in market confidence and the bottoming-out of the recession in the G7 economies in the second half of 2009.[24]
Economist Martin Feldstein argues that QE2 led to a rise in the stock market in the second half of 2010, which in turn contributed to increasing consumption and the strong performance of the US economy in late 2010.[26] Former Federal Reserve Chairman Alan Greenspan calculated that as of July 2012, there was "very little impact on the economy."[89] Federal Reserve Governor Jeremy Stein has said that measures of quantitive easing such as large-scale asset purchases "have played a significant role in supporting economic activity".[25]
According to Neil Irwin, senior economic correspondent at The New York Times, quantitative easing by the US Federal Reserve likely contributed to: i) Lower interest rates for corporate bonds and mortgage rates, helping support housing prices; ii) Higher stock market valuation, in terms of a higher price-earnings ratio for the S&P 500 index; iii) Increased inflation rate and investor's expectations for future inflation; iv) Higher rate of job creation; and v) Higher rate of GDP growth.[90]
Several studies published in the aftermath of the crisis found Large Scale Asset Purchases to have lowered long term interest rates on a variety of securities as well as lower credit risk. The impacts were to modestly increase inflation and boost GDP growth.[91][92][93][94][95]
Exchange rate effects[edit]
Increasing the money supply tends to depreciate a country's exchange rates relative to other currencies, through the mechanism of the interest rate. Lower interest rates lead to a capital outflow from a country, thereby reducing foreign demand for a country's money, leading to a weaker currency. This feature of QE directly benefits exporters living in the country performing QE, as well as debtors, since the interest rate has fallen, meaning there is less money to be repaid. However, it directly harms creditors as they earn less money from lower interest rates. Devaluation of a currency also directly harms importers and consumers, as the cost of imported goods is inflated by the devaluation of the currency.[96]
Counteracting a falling money supply[edit]
In a fractional reserve monetary system the money supply will contract when repayments of bank loans (destroying money) exceed the amount of new credit extended. During the great depression, for example, the money supply fell by approximately 35%.[citation needed]
Risks[edit]
Quantitative easing may cause higher inflation than desired if the amount of easing required is overestimated and too much money is created by the purchase of liquid assets.[22] On the other hand, QE can fail to spur demand if banks remain reluctant to lend money to businesses and households. Even then, QE can still ease the process of deleveraging as it lowers yields. However, there is a time lag between monetary growth and inflation; inflationary pressures associated with money growth from QE could build before the central bank acts to counter them.[97] Inflationary risks are mitigated if the system's economy outgrows the pace of the increase of the money supply from the easing. If production in an economy increases because of the increased money supply, the value of a unit of currency may also increase, even though there is more currency available. For example, if a nation's economy were to spur a significant increase in output at a rate at least as high as the amount of debt monetized, the inflationary pressures would be equalized. This can only happen if member banks actually lend the excess money out instead of hoarding the extra cash. During times of high economic output, the central bank always has the option of restoring reserves to higher levels through raising interest rates or other means, effectively reversing the easing steps taken.
Economists such as John Taylor[98] believe that quantitative easing creates unpredictability. Since the increase in bank reserves may not immediately increase the money supply if held as excess reserves, the increased reserves create the danger that inflation may eventually result when the reserves are loaned out.[99]
Impact on savings and pensions[edit]
In the European Union, World Pensions Council (WPC) financial economists have also argued that artificially low government bond interest rates induced by QE will have an adverse impact on the underfunding condition of pension funds, since "without returns that outstrip inflation, pension investors face the real value of their savings declining rather than ratcheting up over the next few years".[100][101]
Capital flight[edit]
According to Bloomberg reporter David Lynch, the new money from quantitative easing could be used by the banks to invest in emerging markets, commodity-based economies, commodities themselves, and non-local opportunities rather than to lend to local businesses that are having difficulty getting loans.[102]
Increased income and wealth inequality[edit]
See also: Economic inequality
Critics frequently point to the redistributive effects of quantitative easing. For instance, British Prime Minister Theresa May openly criticized QE in July 2016 for its regressive effects: "Monetary policy – in the form of super-low interest rates and quantitative easing – has helped those on the property ladder at the expense of those who can't afford to own their own home."[103] Dhaval Joshi of BCA Research wrote that "QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it".[104] Anthony Randazzo of the Reason Foundation wrote that QE "is fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy. It is a primary driver of income inequality".[104]
Those critics are partly based on some evidence provided by central banks themselves. In 2012, a Bank of England report[105] showed that its quantitative easing policies had benefited mainly the wealthy, and that 40% of those gains went to the richest 5% of British households.[104][106]
In May 2013, Federal Reserve Bank of Dallas President Richard Fisher said that cheap money has made rich people richer, but has not done quite as much for working Americans.[107]
Answering similar critics expressed by MEP Molly Scott Cato, the President of the ECB Mario Draghi once declared:[108][109]
Some of these policies may, on the one hand, increase inequality but, on the other hand, if we ask ourselves what the major source of inequality is, the answer would be unemployment. So, to the extent that these policies help – and they are helping on that front – then certainly an accommodative monetary policy is better in the present situation than a restrictive monetary policy.
Criticism by BRIC countries[edit]
BRIC countries have criticized the QE carried out by the central banks of developed nations. They share the argument that such actions amount to protectionism and competitive devaluation. As net exporters whose currencies are partially pegged to the dollar, they protest that QE causes inflation to rise in their countries and penalizes their industries.[110][111][112][113]
Political risk[edit]
Richard W. Fisher, president of the Federal Reserve Bank of Dallas, warned in 2010 that QE carries "the risk of being perceived as embarking on the slippery slope of debt monetization. We know that once a central bank is perceived as targeting government debt yields at a time of persistent budget deficits, concern about debt monetization quickly arises." Later in the same speech, he stated that the Fed is monetizing the government debt: "The math of this new exercise is readily transparent: The Federal Reserve will buy $110 billion a month in Treasuries, an amount that, annualized, represents the projected deficit of the federal government for next year. For the next eight months, the nation's central bank will be monetizing the federal debt."[114] Ben Bernanke remarked in 2002 that the US government had a technology called the printing press (or, today, its electronic equivalent), so that if rates reached zero and deflation threatened, the government could always act to ensure deflation was prevented. He said, however, that the government would not print money and distribute it "willy nilly" but would rather focus its efforts in certain areas (e.g., buying federal agency debt securities and mortgage-backed securities).[115][116] According to economist Robert McTeer, former president of the Federal Reserve Bank of Dallas, there is nothing wrong with printing money during a recession, and quantitative easing is different from traditional monetary policy "only in its magnitude and pre-announcement of amount and timing".[117][118]
Related policies[edit]
Qualitative easing[edit]
Professor Willem Buiter of the London School of Economics has proposed a terminology to distinguish quantitative easing, or an expansion of a central bank's balance sheet, from what he terms qualitative easing, or the process of a central bank adding riskier assets to its balance sheet:
Quantitative easing is an increase in the size of the balance sheet of the central bank through an increase [in its] monetary liabilities (base money), holding constant the composition of its assets. Asset composition can be defined as the proportional shares of the different financial instruments held by the central bank in the total value of its assets. An almost equivalent definition would be that quantitative easing is an increase in the size of the balance sheet of the central bank through an increase in its monetary liabilities that holds constant the (average) liquidity and riskiness of its asset portfolio.
Qualitative easing is a shift in the composition of the assets of the central bank towards less liquid and riskier assets, holding constant the size of the balance sheet (and the official policy rate and the rest of the list of usual suspects). The less liquid and more risky assets can be private securities as well as sovereign or sovereign-guaranteed instruments. All forms of risk, including credit risk (default risk) are included.[119]
Credit easing[edit]
In introducing the Federal Reserve's response to the 2008–09 financial crisis, Fed Chairman Ben Bernanke distinguished the new program, which he termed "credit easing", from Japanese-style quantitative easing. In his speech, he announced,
Our approach—which could be described as "credit easing"—resembles quantitative easing in one respect: It involves an expansion of the central bank's balance sheet. However, in a pure QE regime, the focus of policy is the quantity of bank reserves, which are liabilities of the central bank; the composition of loans and securities on the asset side of the central bank's balance sheet is incidental. Indeed, although the Bank of Japan's policy approach during the QE period was quite multifaceted, the overall stance of its policy was gauged primarily in terms of its target for bank reserves. In contrast, the Federal Reserve's credit easing approach focuses on the mix of loans and securities that it holds and on how this composition of assets affects credit conditions for households and businesses.[120]
Credit easing involves increasing the money supply by the purchase not of government bonds but of private-sector assets, such as corporate bonds and residential mortgage–backed securities.[121][122] In 2010, the Federal Reserve purchased $1.25 trillion of mortgage-backed securities to support the sagging mortgage market. These purchases increased the monetary base in a way similar to a purchase of government securities.[123]
Monetary financing[edit]
Quantitative easing has been nicknamed "printing money" by some members of the media,[124][125][126] central bankers,[127] and financial analysts.[128][129] Stephen Hester, chief executive officer of the RBS Group, said:
What the Bank of England does in quantitative easing is it prints money to buy government debt, ... So the Quantitative Easing has enabled governments, this government, to run a big budget deficit without killing the economy because the Bank of England has financed it.[130]
The Dutch Central Bank itself sees QE as being a money creation operation:[131]
The Eurosystem directly injects money into the economy by purchasing the bonds with newly created electronic cash. This is called quantitative easing.
However, QE is a very different form of money creation than it is commonly understood when talking about "money printing". Indeed, the term printing money usually implies that newly created money is used to directly finance government deficits or pay off government debt (also known as monetizing the government debt). However, with QE, the newly created money is directly used to buy government bonds or other financial assets,[124] Central banks in most developed nations (e.g., the United Kingdom, the United States, Japan, and the EU) are prohibited from buying government debt directly from the government and must instead buy it from the secondary market.[123][132] This two-step process, where the government sells bonds to private entities that in turn sell them to the central bank, has been called "monetizing the debt" by many analysts.[123] Also, the Federal Reserve has mostly "sterilized" its bond purchases by paying interest to banks for reserve deposits. This removes money from circulation previously added by the Fed's bond purchases. The net effect is to raise bond prices, lowering borrowing rates for mortgages and other loans, without an inflationary increase in the money supply.[133]
The distinguishing characteristic between QE and monetizing debt is that with the former, the central bank creates money to stimulate the economy, not to finance government spending (although an indirect effect of QE is to lower rates on sovereign bonds). Also, the central bank has the stated intention of reversing the QE when the economy has recovered (by selling the government bonds and other financial assets back into the market).[124] The only effective way to determine whether a central bank has monetized debt is to compare its performance relative to its stated objectives. Many central banks have adopted an inflation target. It is likely that a central bank is monetizing the debt if it continues to buy government debt when inflation is above target and if the government has problems with debt financing.[123]
In fact, with the failure of quantitative easing programmes around the world, more and more people are precisely calling for a more overt and direct money printing process, including monetary financing of government budgets, helicopter money or "QE for People" (see section below).
QE for the people[edit]
See also: Helicopter money
In response to concerns that QE is failing to create sufficient demand, particularly in the Eurozone, a number of economists have called for "QE for the people". Instead of buying government bonds or other securities by creating bank reserves, as the Federal Reserve and Bank of England have done, some suggest that central banks could make payments directly to households (in a similar fashion as Milton Friedman's helicopter money).[134] Economists Mark Blyth and Eric Lonergan argue in Foreign Affairs that this is the most effective solution for the Eurozone, particularly given the restrictions on fiscal policy.[135] They argue that based on the evidence from tax rebates in the United States, less than 5% of GDP transferred by the ECB to the household sector in the Eurozone would suffice to generate a recovery, a fraction of what it intends to be done under standard QE. Oxford economist, John Muellbauer, has suggested that this could be legally implemented using the electoral register.[136]
On 27 March 2015, 19 economists including Steve Keen, David Graeber, Ann Pettifor, Robert Skidelsky, and Guy Standing have signed a letter to the Financial Times calling on the European Central Bank to adopt a more direct approach to its quantitative easing plan announced earlier in February.[137]
In November 2015, more than 65 economists supported the campaign 'Quantitative Easing for People',[138] claiming that "Instead of flooding financial markets, money created through QE should be spent into the real economy, on essential public investment such as green infrastructure, affordable housing and/or distributed as a citizens’ dividend to all residents."
Those ideas were also discussed at the European Parliament on 17 February 2016.[139][140]
A variant of QE for the people is People's Quantitative Easing, a policy proposed by Jeremy Corbyn during the 2015 Labour leadership election, which would require the Bank of England to create money to finance government investment via a National Investment Bank.[141]
Altering debt maturity structure[edit]
See also: Operation Twist
Based on research by economist Eric Swanson reassessing the effectiveness of the US Federal Open Market Committee action in 1961 known as Operation Twist, The Economist has posted that a similar restructuring of the supply of different types of debt would have an effect equal to that of QE.[142] Such action would allow finance ministries (e.g., the US Department of the Treasury) a role in the process now reserved for central banks.[142]
See also[edit]
Currency War of 2009–11
Economic history of Japan
Money creation
Open market operation
Quantitative tightening
Zero interest-rate policy ZIRP
References[edit]
Jump up ^ "The Fed - FAQs". Board of Governors of the Federal Reserve System. 22 December 2015. Retrieved 2017-07-31.
Jump up ^ Bernanke, Ben (2015). The Courage To Act (First ed.). New York: W.W Norton & Company. p. 418. ISBN 978-0-393-24721-3.
^ Jump up to: a b "What is quantitative easing?". Bank of England. Retrieved 14 December 2016.
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Jump up ^ "Quantitative Easing" (PDF). Bank of England. Archived from the original (PDF) on 29 August 2012. The Bank can create new money electronically by increasing the balance on a reserve account. So when the Bank purchases an asset from a bank, for example, it simply credits that bank's reserve account with the additional funds. This generates an expansion in the supply of central bank money
^ Jump up to: a b "Q&A: Quantitative easing". BBC. 9 March 2009. Retrieved 29 March 2009.
^ Jump up to: a b "Quantitative Easing Explained". Bank of England. Archived from the original on 16 March 2009. This does not involve printing more banknotes. Instead the Bank pays for these assets by creating money electronically and crediting the accounts of the companies it bought the assets from.
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^ Jump up to: a b "Twisted thinking: Government Debt-Managers May be Undermining Quantitative Easing". The Economist. 31 March 2011. Retrieved 10 April 2011.
External links[edit]
Look up quantitative easing in Wiktionary, the free dictionary.
Credit Easing Policy Tools Interactive chart of the assets on Federal Reserve's balance sheet.
Deflation: Making Sure "It" Doesn't Happen Here, 2002 speech by Ben Bernanke on deflation and the utility of quantitative easing
Bank of England – Quantitative Easing
Bank of England – QE Explained Pamphlet
Modern Money Mechanics Federal Reserve Document Explaining How Money Is Created
Quantitative easing explained (Financial Times Europe)
A Fed Governor Discusses Quantitative Easing Among Other Topics
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values: Category:Use dmy dates from September 2015

values: Category:All articles with unsourced statements

values: Category:Articles with unsourced statements from November 2013

values: Category:All articles with failed verification

values: Category:Articles with failed verification from March 2014

values: Category:Articles with unsourced statements from July 2010

values: Category:Articles with unsourced statements from February 2018

values: Discussion about edits from this IP address [ctrl-alt-n]

values: A list of edits made from this IP address [ctrl-alt-y]

values: You are encouraged to create an account and log in; however, it is not mandatory

values: You're encouraged to log in; however, it's not mandatory. [ctrl-alt-o]

values:
/wiki/Quantitative_easing
View the content page [ctrl-alt-c]
c

values: Discussion about the content page [ctrl-alt-t]

values: p-namespaces navigation vectorTabs p-namespaces-label

values:
p-variants
navigation
vectorMenu emptyPortlet
p-variants-label

values: Past revisions of this page [ctrl-alt-h]

values: p-views navigation vectorTabs p-views-label

values:
p-cactions
navigation
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p-cactions-label

values:
mw-wiki-logo
/wiki/Main_Page
Visit the main page

values:
/wiki/Main_Page
Visit the main page [ctrl-alt-z]
z

values: Featured content – the best of Wikipedia

values: Find background information on current events

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/wiki/Special:Random
Load a random article [ctrl-alt-x]
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values: portal navigation p-navigation p-navigation-label

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values: About the project, what you can do, where to find things

values: A list of recent changes in the wiki [ctrl-alt-r]

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values: List of all English Wikipedia pages containing links to this page [ctrl-alt-j]

values: Recent changes in pages linked from this page [ctrl-alt-k]

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values: A list of all special pages [ctrl-alt-q]

values: Permanent link to this revision of the page

values: Link to connected data repository item [ctrl-alt-g]

values: Printable version of this page [ctrl-alt-p]

values: تيسير كمي – Arabic

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display: none;

values:
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display: none;

values:
interlanguage-link interwiki-cy
display: none;

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interlanguage-link interwiki-da
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values: Ποσοτική χαλάρωση – Greek

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values: تسهیل کمی – Persian

values:
interlanguage-link interwiki-fa
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interlanguage-link interwiki-ko
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values: Квантитативно олеснување – Macedonian

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values: 量的金融緩和政策 – Japanese

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interlanguage-link interwiki-ja
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interlanguage-link interwiki-pl
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values: Количественное смягчение – Russian

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interlanguage-link interwiki-simple
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values: Kvantitativno popuštanje – Serbo-Croatian

values:
interlanguage-link interwiki-sh
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interlanguage-link interwiki-sv
display: none;

values: Кількісне пом'якшення – Ukrainian

values:
interlanguage-link interwiki-uk
display: none;

values: مقداریہ سہل – Urdu

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values: All languages (initial selection from common choices by you and others)

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