Let's begin by mapping out some context by assuming the following goals of implementing QE:

  • prevent dire systemic liquidity concerns
  • reach inflation targets
  • manage expectations in the private sector

If I'm not mistaken, the vast majority of QE has been government debt securities. However, in principle, any asset class could be bought under by issuing central bank liabilities.


If my understanding is correct that any asset class can be bought by issuing a liability (central bank money), then why have we only seen government debt securities be purchased historically? Would a broader range of asset purchases not help the Fed with the goals of QE as listed in the above bullet points?

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    $\begingroup$ Not a complete answer, but for the United States, open market operations are generally limited to a narrow set of asset classes, under Section 14 of the Federal Reserve Act: federalreserve.gov/aboutthefed/section14.htm $\endgroup$ Jun 27 '19 at 19:52
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    $\begingroup$ Not true for every central bank. Bank of Japan holds over 75% Japanese ETF's. $\endgroup$
    – Michael
    Jun 28 '19 at 4:50

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