Will the quantitative easing program make a profit?
The Bank of England is still operating the quantitative easing program with many suggesting that the £175 billion already put aside could well be increased in the short to medium term. In simple terms, the scheme allows UK banks and UK financial companies to "swap" various assets for cash in order to increase liquidity and hopefully provide a more stable base for future transactions.
The hope is that as the UK economy begins to recover the value of these assets which have been used as collateral for cash payments will increase and the quantitative easing program could actually yield a profit of taxpayers. However, at this moment in time there has been little or no upward movement in the value of these assets and there are still concerns that many UK banks may well need to write off significant loans in the short to medium term.
The ongoing quantitative easing program and pressure on the UK economy has impacted upon the exchange rate of sterling which many believe the Bank of England would be happy to see at a lower level. The reduction in the value of sterling will attract overseas investors to the UK but will make imports more expensive and his impact upon the cost of living and inflation rate.
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