Quantitative easing is the process the central bank of any country undertakes to stimulate economic growth after other traditional processes have failed. According to the House of Commons Treasury Committee (p. 21), when undertaking quantitative easing the central bank supply more money to the banking system to maintain the interest rates at zero or reduce it to lower rates. The central bank achieves this mainly by buying assets from banks. The Bank of England (p. 1) notes that quantitative easing is the process of putting more money back into the economy to encourage spending. For a country to experience positive growth, inflation has to be constant. To regulate inflation the central banks use interest rates. The financial institutions borrow money from the central bank using these set interest rates. The movement of the interest rates can affect other rates available in the economy. For instance, it is used to regulate the money supply thereby affecting the spending of the companies and the consumers. Additionally, it affects the rate of inflation in the long run. To maintain inflation at a constant rate, the central bank alters the current interest rates. However, there are cases where the central bank is concerned about the risks of low inflation. As a result, the central bank reduces the interest rates. The central bank has to ensure that the interest rates do not fall below zero. If the bank rates are almost zero and there are indications that they might fall below the current figure, the bank increases the amount of money in supply. The concept of quantitative easing is based on the fact that there are some risks associated with too little money in circulation. Since too much money in circulation leads to higher inflation and too little money in circulation leads to slow economic growth, the central bank needs to maintain a constant rate of inflation. Additionally, the Bank of England (p. 7) suggested that the money in supply needs to continue increasing at a constant rate for any country to realize positive growth in the economy. Quantitative easing also ensures that the government can maintain constant inflation. During the process of quantitative easing, the central bank does not print more money but buys assets from privately owned financial institutions. The central bank, therefore, increases the reserves of the selling bank. As a result, there is more money in supply than before the process was initiated. The increase in the money supply by any central bank may have several effects on the economy. First, the seller of the assets to the central bank may opt to spend it. This might stimulate positive growth of the economy. Secondly, the sellers might use the money to purchase other assets. Those people who own such assets benefit from the buyers and gain money that they too can spend (House of Commons Treasury Committee p. 23). An increase in money supply leads to an increase in the prices of assets. As a result earnings from assets are reduced and this leads to a reduction of the costs of borrowing for both businesses and personal uses. Lastly, as a result of the increase of the commercial bank’s reserves with the central bank, the