Shah and Anchor Kutchhi Engineering College Department of Management Studies

Project on : Selling & Negotiation Skills

Presentation on : Quantitative Easing

Presented by : RAJ SHAH PRAKASH KOTHARI

Submitted to : Prof. Mohan Iyer

Roll No. : 57 69

On : 5th September,2012

DEFLATION

Reduction in supply of money or credit

Decrease in government, personal or investment spending

Decline in prices Falling profits Unemployment Increasing Defaults on Loans Economic Depression

JAPAN FINANCIAL CRISIS

Under recession and deflation for over 10 years around 1990s Aggressive fiscal policy under severe budget constraint Zero interest rate policy

BOJ adopted QUANTITATIVE EASING ON March 19,2001

QUANTITATIVE EASING

QUANTITATIVE EASING

Interest rates close to zero another way of affecting price of money Aim is to still bring down interest rates Central Bank creates new money Central Bank performs Open Market Operations Cheaper borrowing Greater spending Putting additional demand in economy Pulling out of recession

RISKS

May cause higher Inflation It can fail if banks remain reluctant to lend money Depreciate countrys exchange rates Directly harms Importers and benefits Exporters Harms Creditors and holders of that currency

QUANTITATIVE EASING - II

Popular phrase used in context of American Economy around 2010 US Federal Reserve Board Infusion of about trillion dollars Consolidate the recovery of the American Economy

QUANTITATIVE EASING - II
IMPACT ON INDIA

Could flood emerging economies with dollars

US exports competitive

Forcing other related countrys to appericiate

Increase in capital inflows

Likely to push up stock prices

Call for capital control from regulatory authorities