Most articles describe QE as purchasing government securities on the market. I thought that was what ordinary day to day operations of the central bank were in their efforts to maintain a target interest rate. So if they aren't buying government securities day to day, what is it they do to manage the bank lending rate?
In usual open market operations, the central bank will create money, use this money to buy short term treasury securities from maybe banks, individuals, institutions in the open market. This creates more demand for these securities and hence their price goes up and yield goes down. This newly generated money goes into the banking system. With more money, banks have more cash and have more reserves. With more reserves banks may be more willing to lend to each other and to individuals also. This lowers the short term inter banking interest rate. This way, there is more money in the system and there is a downward pressure on rates. With short term treasuries, central bank is less exposed to the interest rate risk.
In quantitative easing(Q.E), both the purpose and the mechanism are different. First of all, Q.E usually will be performed in a situation which is not 'typical' money supply shortage or economic activity slowdown. This will either happen in a crisis sort of situation where aggressive boost is required or when central bank has run out of its primary weapons may be it has hit the zero bound of interest rates. The central bank in these situations might buy securities of different kinds which can be long term treasuries, private securities, securities in a particular area of market which the central bank thinks, needs to be revived. This certainly will increase money into the system but not just that but to further lower the yield and ease out specific markets such as mortgage based securities by reducing the risk spread. One other criterion is the size of the increase in balance sheet of central bank. In Q.E there is usually a much larger change in the balance sheet of central bank. Also, as there are different kinds of securities (including long term securities) in the assets of central bank which are not necessarily treasuries or highly rated securities, the central bank itself is exposed to more risk.
Ben Bernanke said in 2009 that, the Q.E they exercised was not pure Q.E but credit easing because in pure Q.E, the central bank will not discriminate between what securities it is buying. However, according to him, Fed did target few specific markets. According to him, targeting few specific markets is more like credit easing and not pure Q.E.