The economic policies of each nation are similar to unraveling thread. The changes of economic policies influence and are influenced by other countries. In other words, a country is not only related to its own country’s economy, but it also fluctuates with the rise and fall of other countries’ economies. Nowadays, the world is concentrating on the change of one country’s economic policy. On October 29th, the central bank in U.S.A. declared the end of a quantitative easing policy that had continued for 6 years. Because of it, some countries tried to change their own economic policies, and some countries thought that they would not be influenced. Then, what was U.S.A.’s quantitative easing policy? Why are all the countries around the world concentrating on it? U.S.A.’s quantitative easing was started by Ben Bernanke, who was the chairman of the central bank of U.S.A. in 2008 when the economic crisis threatened U.S.A. When the nation’s economic situation was dangerous, the central bank planned to increase the fluidity of currency with a low interest rate. However, because of the continuous reduction of the interest rate, the central bank started to implement the quantitative easing policy. In other words, quantitative easing is the policy where a nation’s central bank buys bonds or properties when the countries lack financing. By implementing the policy, fluidity of currency in the market increases. Then, it brings the effect of interest reduction.
  Nowadays, the economic system of U.S.A. recovered due to the policy. The background of why U.S.A. started the policy started in 2008. At that time, U.S.A. was in a dangerous situation because of an enormous amount of accumulated debt. Also, the main U.S.A. financial institutions went bankrupt, and billions in financial deficit occurred due to the misguided investing of public funds. Actually, after the economic crisis, the financial deficit of U.S.A. increased to a maximum 1,6 trillion dollars. The U.S.A. tried 1st and 2nd rounds of quantitative easing in this situation, and the crisis was relieved gradually. In late 2012, tax incomes increased rapidly and rates of financial deficit decreased. In the end, in 2013, the amount of quantitative easing was reduced as the deficit decreased. Now, U.S.A.’s deficit has reduced to 500 billion dollars, so U.S.A. can issue national bonds on their own credit without the help of central banks.
  Because of the effect of U.S.A.’s recovery, there are misconceptions about it. The mass media reported that U.S.A. stopped the quantitative easing policy because, if the policy is excessive, inflation can occur. However, that’s not true. U.S.A. reduced the amount not only to rapidly influence markets but also to provide a proper amount of quantitative easing constantly. In other words, the policy was the only method of issuing national bonds. As the U.S. dollar has a big impact globally, Korea is concentrating on the policy as are other countries. About the influence on Korea, Prof. Goo Young-wan(the Dept. of Economics) said, “When we look at the decrease of U.S.A.’s quantitative easing, it’s one part of the process of returning to a normal rate, so, I don’t think it will influence Korea a lot. Moreover, even though there are bad influences, I think each nation can deal with the economic slump.”
  It’s hard to predict the impacts of economic situations inside the world economy, which is tangled like a thread. However, with continuous observation, plans to prevent economic influence are needed.

By Seo Yeo-ryung I yr34@cbnu.ac.kr

By Oh Ah-ra I ar34@cbnu.ac.kr